What do you think?
Rate this book
Bank Investing: A Practitioner's Field Guide
Bank A Practitioner's Field Guide offers you the essential toolkit to become a successful bank investor. It packages practical lessons, theoretical knowledge, and historical context, all into one compelling and hopefully entertaining book. The book includes conversations with investors and management teams. Investors include activists, financials specialists, credit investors, and multibillion-dollar asset managers. Management teams have a broad representation from the c-suite of a broad spectrum of participants ranging from a fintech to a bank with over $30bn in assets.
Banks are the oil that lubricates the economy. An understanding of how they operate is essential for analyzing any part of the economy since banks represent a large investing universe and control a sizeable portion of assets. With over 800 public tickers representing over $3 trillion market cap, banks are larger than several other industry groups. Banks are the largest financial intermediaries in the U.S., controlling $15 trillion in financial assets. Their relative size can amplify effects. For example, a small regulatory or environmental change can cascade and ripple through financial markets and have a major impact on the economy.
As fintechs gain in prominence, a fundamental grasp of topics related to banking will help enhance understanding of fintech.
Bank investing can be a fruitful
The most successful investor of our times, Warren Buffett, has had a sizeable investment in banks over time (close to a third of his portfolio weight used to be in banks). Banks allow you to make macro-economic bets since they are highly levered to business cycles. Bank investing allows you to scale your knowledge, as they have relatively homogenized business models... ...at the same time, banks are diverse enough to drive meaningful dispersion in price performance. This divergence of performance can be taken advantage of by an astute and prepared securities analyst. Banks are good vehicles to make specific investment plays on geographic regions, demographic trends (suburban to urban migration, aging), industries (agriculture, tech, energy), news flow (trade/tariffs, weather), real estate subsectors (NYC office, bay area apartments), and investing themes such as ESG, cryptocurrency, and venture capital. Finally, fintech disruption is creating an investing opportunity to play the digital divide between banks that embrace technology successfully and those that get left behind.
Banks are the oil that lubricates the economy. An understanding of how they operate is essential for analyzing any part of the economy since banks represent a large investing universe and control a sizeable portion of assets. With over 800 public tickers representing over $3 trillion market cap, banks are larger than several other industry groups. Banks are the largest financial intermediaries in the U.S., controlling $15 trillion in financial assets. Their relative size can amplify effects. For example, a small regulatory or environmental change can cascade and ripple through financial markets and have a major impact on the economy.
As fintechs gain in prominence, a fundamental grasp of topics related to banking will help enhance understanding of fintech.
Bank investing can be a fruitful
The most successful investor of our times, Warren Buffett, has had a sizeable investment in banks over time (close to a third of his portfolio weight used to be in banks). Banks allow you to make macro-economic bets since they are highly levered to business cycles. Bank investing allows you to scale your knowledge, as they have relatively homogenized business models... ...at the same time, banks are diverse enough to drive meaningful dispersion in price performance. This divergence of performance can be taken advantage of by an astute and prepared securities analyst. Banks are good vehicles to make specific investment plays on geographic regions, demographic trends (suburban to urban migration, aging), industries (agriculture, tech, energy), news flow (trade/tariffs, weather), real estate subsectors (NYC office, bay area apartments), and investing themes such as ESG, cryptocurrency, and venture capital. Finally, fintech disruption is creating an investing opportunity to play the digital divide between banks that embrace technology successfully and those that get left behind.
- GenresFinance
368 pages, ebook
Published February 23, 2021
9 people are currently reading
25 people want to read
Ratings & Reviews
Friends & Following
Create a free account to discover what your friends think of this book!
Community Reviews
Displaying 1 - 5 of 5 reviews
October 21, 2023
"Bank Investing: A Practitioner's Field Guide" by Suhail Chandy and Weison Ding explains the following:
1. Understanding Bank Investments:
- Exploring financial statements of banks can be complex.
- Key metrics like Return on Assets (ROA) and Return on Equity (ROE) reveal profitability.
- Scrutinize asset quality metrics such as Non-Performing Assets (NPAs) and liquidity indicators like Loan to Deposit Ratio (LDR).
- Consider sustainable loan growth for healthy investment decisions.
2. Credit Analysis and Loan Portfolio Composition:
- Analyze loan loss reserves and their impact on lending opportunities.
- Focus on credit quality indicators like the Texas Ratio and Net Charge-Offs.
- Understand the implications of the Current Expected Credit Loss model (CECL) on loan categories.
3. Bank Regulations and Interest Rates:
- Capital requirements and stress testing indicate a bank's stability.
- Monitor changes in interest rates and their effect on a bank's profitability.
- Be aware of the implications of the 2018 Economic Growth Act on regulatory thresholds.
4. Bank Mergers and Acquisitions:
- Consolidation is a prevailing trend due to economies of scale and regulatory burdens.
- Learn about different types of transactions, such as whole bank acquisitions and FDIC-assisted deals.
- Consider the importance of post-acquisition integration for the success of mergers.
The main aspects discussed in "Bank Investing: A Practitioner's Field Guide" help investors navigate the complexities of the banking industry and make informed investment decisions.
Here are the reasons why "Bank Investing: A Practitioner's Field Guide" is rated 4 stars:
1. Comprehensive Coverage: The book offers a comprehensive and detailed overview of the intricacies of bank investing, providing a wealth of information that is valuable to both seasoned investors and those new to the field.
2. Practical Insights: The practical insights provided in the book are highly useful for investors looking to understand how to navigate the complexities of the banking industry, offering valuable tips and strategies for maximizing returns and minimizing risks.
3. Clarity and Accessibility: Despite the complex subject matter, the authors present the information in a clear and accessible manner, making it easy for readers to grasp even the most intricate concepts related to bank investments.
4. Relevance: The book's content remains relevant in the ever-evolving financial landscape, providing insights into contemporary practices, regulations, and market trends that are crucial for investors to stay informed and make informed decisions.
5. Real-World Examples: The inclusion of real-world examples and case studies helps readers apply the theoretical knowledge to practical scenarios, enabling them to better understand the implications of various investment strategies and decisions.
6. Practical Applications: The book not only explains theoretical concepts but also provides practical applications and actionable advice that readers can implement in their investment practices, making it a valuable resource for individuals looking to enhance their investment portfolios.
These factors contribute to the book's high rating, as it effectively educates and empowers readers to become more knowledgeable and confident in their bank investment decisions.
1. Understanding Bank Investments:
- Exploring financial statements of banks can be complex.
- Key metrics like Return on Assets (ROA) and Return on Equity (ROE) reveal profitability.
- Scrutinize asset quality metrics such as Non-Performing Assets (NPAs) and liquidity indicators like Loan to Deposit Ratio (LDR).
- Consider sustainable loan growth for healthy investment decisions.
2. Credit Analysis and Loan Portfolio Composition:
- Analyze loan loss reserves and their impact on lending opportunities.
- Focus on credit quality indicators like the Texas Ratio and Net Charge-Offs.
- Understand the implications of the Current Expected Credit Loss model (CECL) on loan categories.
3. Bank Regulations and Interest Rates:
- Capital requirements and stress testing indicate a bank's stability.
- Monitor changes in interest rates and their effect on a bank's profitability.
- Be aware of the implications of the 2018 Economic Growth Act on regulatory thresholds.
4. Bank Mergers and Acquisitions:
- Consolidation is a prevailing trend due to economies of scale and regulatory burdens.
- Learn about different types of transactions, such as whole bank acquisitions and FDIC-assisted deals.
- Consider the importance of post-acquisition integration for the success of mergers.
The main aspects discussed in "Bank Investing: A Practitioner's Field Guide" help investors navigate the complexities of the banking industry and make informed investment decisions.
Here are the reasons why "Bank Investing: A Practitioner's Field Guide" is rated 4 stars:
1. Comprehensive Coverage: The book offers a comprehensive and detailed overview of the intricacies of bank investing, providing a wealth of information that is valuable to both seasoned investors and those new to the field.
2. Practical Insights: The practical insights provided in the book are highly useful for investors looking to understand how to navigate the complexities of the banking industry, offering valuable tips and strategies for maximizing returns and minimizing risks.
3. Clarity and Accessibility: Despite the complex subject matter, the authors present the information in a clear and accessible manner, making it easy for readers to grasp even the most intricate concepts related to bank investments.
4. Relevance: The book's content remains relevant in the ever-evolving financial landscape, providing insights into contemporary practices, regulations, and market trends that are crucial for investors to stay informed and make informed decisions.
5. Real-World Examples: The inclusion of real-world examples and case studies helps readers apply the theoretical knowledge to practical scenarios, enabling them to better understand the implications of various investment strategies and decisions.
6. Practical Applications: The book not only explains theoretical concepts but also provides practical applications and actionable advice that readers can implement in their investment practices, making it a valuable resource for individuals looking to enhance their investment portfolios.
These factors contribute to the book's high rating, as it effectively educates and empowers readers to become more knowledgeable and confident in their bank investment decisions.
December 28, 2022
Most of what is in this book is correct. It's what's not in the book that leads me to rate it only 3 stars.
First, banking is not the same in different countries around the world. American banking one of the oddest versions, mostly because the government backs 30-year fixed rate mortgages and the American banks must seek their profits elsewhere. This book is entirely about the American version of banking and that is nowhere acknowledged.
Second, the book tells you how you can get information, but very seldom what to do with it. There are 25 pages on the Fed and interest rates when really all you need to know is that the Fed decides what rates should be and that's what happens. There's a quarter page on the difference between cheap, stable deposits and expensive, flighty deposits and that's one of the two most important elements of bank investing.
Similarly, there's a long section on the different types of loans which doesn't deal with construction lending, which is the nitroglycerine of the loan family. It's so risky that it deserves its own chapter and it doesn't even get a paragraph.
A buffed up section on valuation would have been helpful too.
There's nothing superior out there so this book will get you started, but be under no illusion that it's taught you enough to invest safely in bank stocks.
First, banking is not the same in different countries around the world. American banking one of the oddest versions, mostly because the government backs 30-year fixed rate mortgages and the American banks must seek their profits elsewhere. This book is entirely about the American version of banking and that is nowhere acknowledged.
Second, the book tells you how you can get information, but very seldom what to do with it. There are 25 pages on the Fed and interest rates when really all you need to know is that the Fed decides what rates should be and that's what happens. There's a quarter page on the difference between cheap, stable deposits and expensive, flighty deposits and that's one of the two most important elements of bank investing.
Similarly, there's a long section on the different types of loans which doesn't deal with construction lending, which is the nitroglycerine of the loan family. It's so risky that it deserves its own chapter and it doesn't even get a paragraph.
A buffed up section on valuation would have been helpful too.
There's nothing superior out there so this book will get you started, but be under no illusion that it's taught you enough to invest safely in bank stocks.
September 26, 2023
Keywords:
1-ROA/ROE(profitability of a bank).
2-asset quality: Scrutinize asset quality metrics like NPAs to judge how risky a bank is./liquidity/sustainable growth.
3-Credit analysis and loan portfolio composition.
4-credit quality (Texas Ratio and Net Charge-Offs. )
5-Current Expected Credit Loss model, or CECL.
6-capital requirements and stress tests.
7-interest rate.(Federal Reserve announcements about interest rates)
8-mergers and acquisitions and the competitive landscape in the banking world.
9-Mergers and acquisitions.
1-ROA/ROE(profitability of a bank).
2-asset quality: Scrutinize asset quality metrics like NPAs to judge how risky a bank is./liquidity/sustainable growth.
3-Credit analysis and loan portfolio composition.
4-credit quality (Texas Ratio and Net Charge-Offs. )
5-Current Expected Credit Loss model, or CECL.
6-capital requirements and stress tests.
7-interest rate.(Federal Reserve announcements about interest rates)
8-mergers and acquisitions and the competitive landscape in the banking world.
9-Mergers and acquisitions.
April 15, 2023
I think this book could've been much shorter. There are some chapters that I don't think are necessary, and I think delving into valuation criteria would've been more important. Overall, the book is good for anyone with little or no background on banking or how banks work.
October 21, 2023
I can't apply everything in my country but a good introduction to knowing how bank works.
Displaying 1 - 5 of 5 reviews