How do I analyze the financial performance of banking sector stocks before investing?
The price-to-book (P/B) and price-to-earnings (P/E) ratios can help investors compare bank sector stocks from the perspective of risk and growth potential. The efficiency ratio and loan-to-deposit ratios are also quite crucial. The efficiency ratio provides knowledge about how banks utilize their assets. Meanwhile, the loan-to-deposit ratio is a measure of the bank’s liquidity.