Intrinsic value of banks

Something I already explained in 2006 when I left my job in Amsterdam was that banks have very little intrinsic value. That means that the value of their shares is based mostly on profits.

Banks tend to use large office buildings that aren’t much use to other industries. Used computers are worth next to nothing.

The money banks have is owned by other people, and banks have to pay it back.

Banks lend money to others hoping to grate some profits off of it. That is where their profits and, with that, value comes from. Once this business model folds, bank shares are worthless.

© Koos Swart 2013