Investor's college

Top 5 financial ratios: Banks

Banks are peculiar beasts. If most companies’ financial statements are from Mars, banks’ are from Venus. Items like ‘inventory’ and ‘cost of goods sold’ are nowhere to be found.

Reading time: 10 minutes

Banks are in the business of money. It’s their lifeblood. They borrow it, lend it and facilitate its movement around the economy (for a handy fee, of course). So many of the ratios used to assess a bank’s performance are peculiar to the industry.

Previous Top 5 ratio articles

Retailers

Manufacturers

Listed property sector

In this article we’ll explore some key ratios that you’re likely to come...

Our big banks’ Achilles’ heel

‘Australian banks in half trillion dollar derivatives scare’ is a headline no-one wants to read. And while it’s unlikely to ever appear, it is possible. Greg Hoffman explains why forewarned might be forearmed.

Reading time: 8 minutes

Key points

Australian banks are the envy of the world, having retained their credit ratings

Our big banks’ loan-to-deposit ratios exceed 100%

A dependence on foreign lending exposes them to several risks

According to one legend, when Achilles was born it was foretold that he would be killed in battle by an arrow. So, in an understandable pre-emptive move against that fate, his mother took him to the river Styx which...

An introduction to Listed Investment Companies

Loathe ‘em or love ‘em, LICs are here to stay. Greg Hoffman provides a beginner’s guide to analysis and valuation of Listed Investment Companies.

Reading time: 10 minutes

Key points

Understand the LIC’s approach

Analyse the fee structure

Pay an appropriate price

You’re reading this research, either in printed form or on our website, because you presumably believe that managing your own money gives you the best chance of achieving healthy investment returns. We’re not about to argue with that.

But what if you don’t yet have enough confidence in your own abilities to...