Thread by @sharetwits

Total Mark-Cap #JSE Banks & their 12-month price change
Firstrand R336.34bn +57,17%
Standard Bank R233.5bn +29,09%
Capitec Bank R215.8bn +114,44%
ABSA Grp R130.88bn +98,25%
Nedbank R90.34bn +69,07%
Investec Plc R41.1bn +80,62%
Investec Ltd R18.6bn +79,7%
Finbond R1.1bn -23,7%

2/ Pre-2008 a # of global banks were trading at metrics of 2x price-to-book. That consolidated down to a more acceptable discount of between 0,5-0.8x P/B. Secured & higher quality books commanding a smaller discount & occasionally a rating close to or at a slight premium to book.

3/ @Scranston Notes in his BD article today that the stellar performance of ABSA & Nedbank was part attributable to previously trading at a significant discount to book, with ABSA starting at 0.5x book businesslive.co.za/fm/money-and-i…

4/ There are three metrics I’ve always looked at when investing in banks. First price-to-book (P/B), secondly the cost-to-income ratio (C/I) & then simply the P/E ratio. On P/B & P/E I found #CPI to be expensive & didn’t like that C/I was going the wrong way from sub-30% to 40%+.

5/ These are the current P/E & P/B ratios of the #JSE banks.

Firstrand 23.20 | 1.97
Standard Bank 13.76 | 1.15
Capitec Bank 47.1 | 5.17
ABSA Grp 9.36 | 1.02
Nedbank 10.02 | 0.88
Investec Plc 10.35 | 0.51

INP & NED trading at discount of P/B, ABSA trading at book & CPI at 5.2x