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Are the banks expensive?

Broker reports editor |  23 June 2014  |  Investing

ExpensiveThe banks are being considered to have high valuations based on the forward price earnings ratio (PER), which is the price of the shares divided by the earnings per share. The PER is the most basic valuation metric in share analysis. ANZ is trading on a forward PER of 12.8 times and NAB on 12.2 times. Commonwealth is on 15 times and Westpac on 14.3 times.

Deutsche Bank, however, reckons that the banks are reasonably cheap:

These graphs indicate that the banks are not especially expensive when compared with the rest of the industrial sector and the wider market. Compared with the rest of the industrial sector they are cheaper:

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