What Are The Current Price-to-Book Ratios For The Largest U.S. Banks?

While U.S. Bancorp and Wells Fargo’s shares currently have a P/B ratio of roughly 150%, the figures for Citigroup and Bank of America are below 60%

The P/B ratio compares the share price with the bank’s underlying financial condition (captured by the book value per share), and can indicate whether the shares are being priced too cautiously or too aggressively. Marked differences between the price of a company’s shares compared to its book value are often a sign of under- or over-valuation. At times, however, very low P/B ratios may actually be because of problems with the company’s business model, whereas high P/B ratios could be due to optimism about the future potential of a company’s business model.

Notably, shares of U.S. Bancorp and Wells Fargo have traded at a significant premium to book value since the economic downturn of 2008 – indicating that investors believe in significant growth opportunities for both these banks in the long run. On the other hand, Citigroup and Bank of America have traded at a marked discount to book value as investors remain skeptical about the quality of legacy loans on their balance sheets.

Notes:
1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment/ ask questions on the comment section
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to the full Trefis analysis for U.S. Bancorp | Wells Fargo | Goldman Sachs | JPMorgan | Morgan Stanley | Bank of America | Citigroup

View Interactive Institutional Research (Powered by Trefis):
Global Large Cap | U.S. Mid & Small Cap | European Large & Mid Cap
More Trefis Research