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????¡ñ Bank's business model can be summarized in three types of risk
management: credit risk, liquidity risk and interest rate risk.
????¡ñ concerned about appropriate sound banking operations. Investors
should select those who hold large relative to its competitors based on
assets, liquidity, and future provision for bad debts has been a moderate
risk reserve bank.
????¡ñ Bank profit and loss account of the different composition reveals
the instability of financial performance, which comes from such as
interest rate and credit environment and many other factors. In general,
a good bank should operate in a variety of environments to show steady
growth in net profit. Investors should be able to pick out the track
record of good banks to pay more efforts.
????¡ñ well-run bank will match the assets and liabilities, strict time
limit. For example, banks should use the long-term liabilities (such as
long-term debt or deposits) to do long-term loans, rather than short-term
funds to do it. Investors should avoid bank loans to do so.
????¡ñ banking industry has a huge competitive advantage. They can even
interest rate even lower than the federal government to borrow money.
They have huge economies of scale due to the huge established sales
distribution network. Sensitive nature of banking capital to prevent a
new competitor, and customer switching costs high.
????¡ñ Investors should select those with good equity base, moderate,
stable return on equity and return on assets, profitability, steady
growth can bank.
????¡ñ Comparative use of book value similar to the bank, may be to avoid
paying too much for the bank stock is a good way.
????Banking industry in the global economy has an enviable position, they
funnel the process of capital formation and engine.
????Banking almost simultaneous increase in world output. No matter what
industry, the biggest demand is the capital.
????Bank profit model is simple. Net interest income and non interest
income is the bank's net income together, this is the banking business
????Banks have their own unique advantages, it is the banking industry a
strong and lasting basis of competitive advantage.
????Banking is the world's lowest cost, most secure mobile manufacturer.
????On risk 1, 2 credit risk, liquidity risk 3, interest rate risk
????Credit risk is the core lending business. Investors through a review
of bank balance sheets, loan classification, the trend of bad loans and
bad debt rate, as well as loan management philosophy can be found on the
credit quality of feeling.
????Large bank balance sheet provides three kinds of protective measures
to isolate the major risks: 1, loan portfolio diversification; 2,
conservative underwriting and account management; 3, paragraph back
positive program.
????Oil tycoon Paul Gates: "If you owe the bank one hundred U.S.
dollars, that is your problem; if you owe the bank 100 million U.S.
dollars, that is the problem banks."
????Banks often have proven credit certification systems and procedures
to reduce the risk of default, which is some large non-bank companies
????Credit quality of banks: bad debt rate and the ratio of overdue
????The growth rate of the ultra-high speed to remain vigilant. In the
financial services industry it is axiomatic: rapid growth may lead to big
????Wells Fargo is the largest U.S. retail bank, Bank of America's top
retail banks top three syndicated loans is JPMorgan Chase Bank, Bank of
America, Citibank
????Deposit liabilities of the banks form a real asset. Low-cost core
deposits (such as check deposits) is very stable, cheap. This is why
tracking is so important because the level of deposits.
????Concerned about the diversification of loans and changes: greater
risk of traditional mortgage loans and other indirect
????We can not simply that the "high interest rates, good; low
interest rates, bad" economic downturn led to doubling of risk
reserves, and therefore offset the higher interest rate differential from
????Large banks have the ability through the capital market to allow
investors to buy the loan portfolio (more like bonds) to cover interest
rate risk, the difficult things onto other people.
????Competitive banking industry: a huge capital needs; 2, huge economies
of scale; 3, monopoly industry structure throughout the region; 4,
consumer switching costs.
????The characteristics of a successful bank:
???????1, a strong capital base. A strong capital base is an investment
bank loans the most important issue to consider. Investors can find some
measure the most important asset is the equity ratio, the higher the
ratio the better. Large bank capital adequacy ratio of 8% -9% range.
???????2, the net return on equity and return on assets. In general,
investors should look to continue to produce 15% -20% return on net
assets of the bank. The best return on assets 1.2% -1.4% should be
???????3, the efficiency ratio. To find a good efficiency ratio of banks,
a good efficiency ratio of bank charges has been evidence of effective
???????4, the net interest margin. Most of the bank's net interest margin
at 3% -4% range.
???????5, strong income. ¢Ù net interest margin; ¢Ú charges a percentage
of total revenue; ¢Û fee income growth.
???????6 MB ratio. Representative, the big banks in the past 10 years,
often 2 to 3 times the book value of the price of transactions. A sound
banking to less than half the price of the book value of transactions,
often value for money. Remember that bank shares have reason to discount
the total transactions, so make sure you find out the risks.
????Selection of high quality banking stocks, the best defense is to
maintain patience and a healthy attitude of skepticism. Looks promising
and for a period of time after the central bank to understand the
composition of the portfolio. On their loan, risk management approach,
management quality and banks have an idea of the number of equity
capital, when the opportunity arises, you can point and from the best
????(From "true market rules," [U.S.] Pat Dorsey)