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QuestionsCategory: Financials QuadrantBanking Stocks balance sheet and income statement is difficult to understand
JC Cheng asked 3 years ago

Hi Coaches,
I encounter difficulties to fill in IQ financial analysis spread sheet when I was trying to analyze banking stocks. The balance sheet and income statement are different from other sectors.
I believe banking annual report is using different term for below items. It would be helpful if you can guide me to look for:

  • cost of goods sold
  • SGA expenses
  • Assets – Annual report merged current and non-current assets
    • cash and short-term funds – I believe this is belongs to current assets.
    • Securities held-for-trading/for-sale/maturity, derivative financial assets, deferred tax assets – not sure
  • liabilities – Annual report merged current and non-current liabilities
    • Deposits from customer/placement in banks – I believe this should belongs to current liabilities.
    • Derivative financial liabilities, hybrid capital securities, provision for tax expenses and zakat, deferred tax liabilities – not sure

Thanks.
 
Regards,
JC

1 Answers
Victor Chng answered 3 years ago

Hi JC,
 
The investment quadrant system cannot be used for bank stocks as it require a different set of ratios and thinking to analyse them. Unfortunately, we do not have the competent or experience to analyse bank stock.
 
I found some links on the internet that may be of your interest about analysing bank below:
 
https://www.investopedia.com/articles/active-trading/082615/key-financial-ratios-analyze-retail-banks.asp
 
https://www.valueresearchonline.com/story/h2_storyview.asp?str=15431
 

JC Cheng replied 3 years ago

Hi Victor,
The source of the information is very useful.
Thanks for the reply.

Victor Chng replied 3 years ago

You are welcome :)