Moo Earnings wrote a post · Jul 19 05:07

Guess the stocks: Identify banks' ability to generate revenue

Depositing money in a bank or investing in bank stocks, what's your take? In fact, if focusing solely on interest, the stability offered by bank stocks and bank deposits can be quite comparable, and at times, the dividend yield from bank stocks might even surpass that of bank deposits. Unfortunately, in practice, buying bank stocks also requires consideration of the fluctuation in stock prices, where as depositing money in a bank carries minimal concern for principle loss.

Any possible way to have your cake and eat it too, that is, getting a relatively high dividend yield while also gaining from stock price? A fundamentally strong bank might fit the bill here.

Before we delve any further, here's a quick insider tip: Keep reading to the end for a surprise waiting for you! 🎁 Trust me, you won't want to miss out.
Now, back to our discussion.

Roughly speaking, the primary business of banks is to transform deposits into loans and generate income through the interest spread. Would a bank that obtains deposits at lower interest rates and lends out money at higher rates be considered to be performing better than other banks? Maybe, but there needs a way to identify this.

Net Interest Income (NII) can somehow solve this problem. It reflects the difference between the revenue generated from assets and the expenses related to liabilities, thereby indicating the ability to generate revenue.

Figure: JPMorgan Chase's NII and Revenue from Q1 2019 to Q1 2024 (Source: SEC filings)

Challenge Starts here>>

What do we get if we compare the NII of different banks? Here comes the questions!

Figure: NII of Bank A, B, C and JPM from Q1 2019 to Q1 2024 (Source: SEC filings)

Questions:
1) Which bank do Bank A, Bank B and Bank C refer to, respectively?
2) What's the ranking of Bank A, B, C and JPMorgan Chase in terms of share price %gains from January 1, 2019, to July 18, 2024?
Reference answer form: A > B > C > JPM (Please replace A, B, C with the specific company name and JPM is also one of those to be compared. Don't just put JPM at the end.)

Rewards:
An equal share of 5000 points: All mooers who read through the post and answer all the questions correctly will get an equal share of 5000 points. (e.g., If 100 mooers answer correctly, each mooer will get 50 points.)

Hint:

For the introduction for stock compare, please tap here and learn more>>

How to participate?
Drop your answers in the comment section below!
Note: Please answer all the questions!

Event time:
Now till 23 July, 2024, 23:00 ET

Disclaimer:
This presentation is for information and educational use only and is not a recommendation or endorsement of any particular investment or investment strategy. Before investing, please consult a licensed professional. See this link for more information.

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