Why PE and PB aren’t enough for banks – Know the best banking ratios for stock analysis in India
Investing in banking stocks is not the same as investing in IT, FMCG, or manufacturing companies. While many investors look at general ratios like Price-to-Earnings (P/E), Return on Equity (ROE), or use DCF models, these tools don’t capture the real risks of banks.
Why? Because banks deal with money as their raw material. Their business is about deposits, loans, and risk management. A bank can look cheap by P/E or even efficient by ROE, yet still hide massive risks in its loan book.
That’s why investors must look at banking-specific ratios that show loan quality, provisions, capital buffers, and funding strength.
Unfortunately, almost every financial platform in India shows only general ratios for all companies, including banks. This…
