Price to Book RatioP/B

P/B shows how many times book value investors are willing to pay for a share. It is widely used to value banks, because bank assets are mostly financial and their book values are relatively close to market values.

A P/B above 1 means the market values the bank above its accounting net worth, usually because it expects the bank to earn a return on equity above its cost of equity. A P/B below 1 may indicate that the market doubts asset quality, expects losses or sees low profitability.

P/B is linked with ROE and P/E: P/B = P/E × ROE. A bank with a consistently high ROE therefore tends to trade at a higher P/B.

On NEPSE, investors commonly compare P/B together with P/E, EPS and dividend history when choosing banking stocks. Because bonus shares lower book value per share, the P/B can change after a bonus issue even if the market capitalisation is unchanged.

P/B ले लगानीकर्ता किताबी मूल्यको कति गुणा तिर्न तयार छन् भन्ने देखाउँछ। बैंकको सम्पत्ति मुख्यतः वित्तीय भएकाले बैंक शेयर मूल्याङ्कनमा यो व्यापक प्रयोग हुन्छ।

१ भन्दा माथिको P/B ले बजारले बैंकलाई लेखा नेटवर्थभन्दा बढी मूल्य दिएको (स्वपुँजी लागतभन्दा बढी ROE को अपेक्षा) देखाउँछ; १ भन्दा कम भए सम्पत्ति गुणस्तर वा नाफामा शङ्का देखाउन सक्छ। P/B = P/E × ROE। बोनस शेयरले प्रतिशेयर किताबी मूल्य घटाउने भएकाले P/B पनि परिवर्तन हुन्छ।