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Stingy Investor Tip Sheet

Banks with book value

As U.S. banks collapse one after another, let's take a quick look at the situation north of the border. Sure, some Canadian banks suffered setbacks this year but life is pretty good in Canada.

The roughed up include CIBC which was recently nominated as the bank most likely to walk into a pointy stick. But both BMO and National Bank have been under pressure.

An important, if imperfect, indicator of value for banks is book value. All else being equal, banks with lower price-to-book-value ratios (P/B) are more attractive.

Just keep in mind that big banks have been known to fall below book value during stressful times. On the other hand, many could move sharply higher should the good times return.

Company			Price    P/B    P/E   Yield
======================  ======  =====  =====  =====
Bank of Montreal (BMO)	$47.41   1.30   13.0   5.9%
TD Bank (TD)		$60.41   1.56   11.7   4.0%
CIBC (CM)		$60.12   1.74  -12.7   5.8%
Scotiabank (BNS)	$45.83   2.12   12.3   4.3%
Royal Bank (RY)		$46.50   2.31   12.4   4.3%
Source globeinvestor.com & msn.com, September 16, 2008

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09/16/2008   11:59 PM EST   Permlink   save & shareBook Value



 
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