What will NAB be worth in 2017? Pt 1

In the first of a two-part analysis, Greg Hoffman explains the main drivers of a bank’s profit and outlines the first two of five scenarios that value NAB shares in five years’ time.

There’s a reason why banks trade on price-to-earnings ratios lower than other industrial stocks. It isn’t just the debt, but how it hugely increases the range of possible futures a bank may enjoy, or suffer. Debt amplifies the risk of disaster when times are tough, and boosts returns when the going is good.

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