Comm Bank is trading at 2.6 times book value.
The best large bank in the USA, Wells Fargo, is trading at 1.6 times. An average bank is 1.1
Traders have valued equity on the CBA balance sheet (and the other big 4 banks) at a high multiple for a long time. When debt inflation inverts to debt deflation, and all those juicy home loans start to stink, CBA will be crushed. If they merely fall back to the Wells Fargo level, they will be in the $50s. If they go below a P/B of 1.0, which should happen in a debt crisis, they'll be well under $30.
No comments:
Post a Comment