The shares of financial institutions that are licensed to hold the deposits and also receive them are known as 股票行. It can also be beneficial to loan out the money to a business and individuals. High-quality bank stocks should be a part of the investor’s portfolio.
Describe the work in brief:
The business model of the bank is different from a manufacturing company. The method that is used to calculate the bank stock is different. The basic business of the bank is accepting the deposits and also giving out loans. The easiest way of making money is by charging a high-interest rate. The interest rate on the loans is paid to the depositors.
Elaborate on the types:
Commercial Banks: This bank also has a bank stock. Commercial banks are general banks that people think of accepting deposits and lending them money. Whenever you need any money, you can go and borrow the cash easily from the bank.
Investment Bank: The investment banks provide financial services to different corporations and companies. It also provides financial services to the government. The services in mice all the complex financial transactions. It gives advisory services, stock trading and also takes the responsibility of managing the assets.
Universal Banks: Universal banks offer both investment and commercial services. The major benefit that you will get from these 股票行 is that they have a revenue stream diversified and also invest in international scale. They understand all the complex forms of business.
Some profitability metrics can be illustrated as:
Return On Equity: The return on equity is a popular metric of 股票行. It is the profit that is generated by a company as the percentage of the shareholder’s equity. The amount is returned to the shareholders if the assets get sold and the debts can be repaid. If the return ok equity is high, the more the company will be efficient.
Return On assets: The return on Assets is the percentage of the overall profit or we can also say it as the net income. A company checks the assets and makes them relative by comparing them to the total assets. It includes all the interest-earning loans and securities. It may also include cash.
Net Interest Margin: The net interest margin is the difference that is given on the interest that the bank receives. The interest is paid on the deposits. The interest rate tends to rise and similarly the margins also rise. If the rates fall, it will have less to small net interest margins.
Efficiency Ratio: The efficiency ratio generally measures the revenues of the bank that cover the operating costs. It is not like the metrics that you see where the number elevates. If the efficiency ratio falls drown then it will bring losses. In such a case it should bring higher returns and more profits. If you have low expenses that means you will have surplus money to invest.