FIG (Banks & Insurance)
Why does a standard unlevered DCF fail when you point it at a bank?
Model answer
Every input breaks.
- Unlevered free cash flow is undefined because you cannot separate operating from financing flows — interest and changes in deposits/borrowings ARE operations
- capex and…
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More from FIG (Banks & Insurance)
- Why is EV/EBITDA a meaningless multiple for a bank?
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- Why are capex and working capital effectively undefined concepts for a bank?
- Why is interest expense an operating item for a bank when it's a financing item everywhere else?
- If revenue and EBITDA are out, what P&L lines do FIG analysts actually anchor on for a bank?