By Robbie Citrino for Kapitall.
Price to book (P/B) ratios are one of the most important metrics to value investors. It is caluclated by dividing the current market cap of a company by its tangible assets—cash and capital. When a company has a P/B of 1 it is valued at the exact amount of its tangible assets.
Since the financial crisis, banks have been routinely valued at a P/B below 1 as investors, fearing new regulations and fines will inhibit banking’s growth in coming years, have scaled down their expectations for the sector.
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