How to analyze bank stocks? it’s through stock market academy. It can analyze almost 90% of all stock’s within the market. But it cannot analyze bank stocks.
Analysis of banking stocks isn’t like analyzing stocks of other businesses.
Why? Because the business model of banks are different from other business. Hence, their financial statements also are prepared differently.
In simple words, the financial reporting of banks is different than other companies. The financial ratios which may analyze other stocks aren’t effective to research bank stocks. So if you would like to research bank stocks, do that first. My suggestion is, plow ahead and skim about the business model of banks. this may go an extended way in doing the amount crunching of bank stocks learn more in stock market academy. banks use some of our deposits to earn some money for themselves. In turn, the profits that they earn also are shared with us. How the share is done? By giving us return on our deposits in sort of interests (like 3.5% on savings a/c).
What happens to the deposited money in a savings account? The deposited money grows in size as they’re earning interest. Suppose the principal deposited amount is Rs.1,00,000. At rate of three .5% p.a. interest, the deposit will become Rs.103,500 after one year.
This is a win-win business model for each one (banks and us). How?
For People: Firstly, they’re getting an area where they will park their money safely. Secondly, they’re also getting an incentive to park their money in banks as their deposited money also will grow in size. How? As banks can pay interest on the deposits. Read: guide the way to economize.
For Banks: As banks get liquid cash from people, they will use this money to try to onward business and earn some profits. this manner banks are ready to cover their cost of operation. Moreover, banks also make some profit. Similar Reading: Business model of airports.
Depositors are happy, and the banking sector is additionally happy as they’re making profits.
