Subject The article addresses valuation of commercial banks other than listed companies, using a comparative approach. Objectives The study aims to find a solution to the problem of rapid and reliable valuation of commercial bank equity capital, using the multiplier method. Methods I employ the CAPM model and the two-stage dividend discount model, and interpretation of the latter to express the price-earnings and the price-book value multiple to value assets that are not traded publicly. The study draws on regression analysis to establish a connection between multipliers and fundamental indicators for a sample of 50 banks based on the bank's equity rating. Results The paper offers analytical tools for evaluation of banks as non-tradable assets, presents an approach to estimate the beta coefficient as a regression coefficient of the banking sector index and its adjustment for financial leverage. Furthermore, it states regression dependence of the price-earnings multiplier on the most significant factors of value creation and regression dependence of the price-book value multiplier on profit growth rate and ROE, and establishes statistical confidence of the regressions. Conclusions The established regression dependence of PE and PBV multipliers enables a comparative analysis of value of banks. Regressions help mitigate differences, in this case through such fundamental indicators as growth rate, beta coefficient and profitability.
Keywords: value, multiplier, comparative approach, bank valuation, banking sector
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