Anybody who has done the modified discounted dividend model for commercial bank valuation, I would like to ask the following questions
1) Should Deposits drive or determine the Advances or vice versa ? Which one should be projected first ?
2) How should the Terminal value be determined ? For perpetuity method , how should a Sustainable growth rate be calculated
3) It is said that since a most of a bank's assets are monetary and marked to market, their value is close to book value. By that logic, a bank's justified P/BV should be 1, what if it is very high or low ? Can it still be justified or is it an indication of over /under valuation
4) To make sure projected balance sheets meet the regulatory requirements and capital ratios are met, we need a value of RWA. How should that number be projected ? As % of Total Assets ?
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