DXBGY
Dexia S.A.
$0.94
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Overvalued
Trading 234.0% above fair value
Bear
$0.28
-70.1%
ROTCE 4.0% → 0.30x TBV
Fair
$0.28
-70.1%
ROTCE -6.0% → 0.30x TBV
Bull
$0.28
-70.1%
ROTCE -6.9% → 0.30x TBV
Adjust Assumptions
-6.0%
9.8%
Key Value Driver
ROTCE (-6.0%) vs. cost of equity (9.8%)
Implied Market Multiple
1.0x
Summary
With ROTCE of -6.0% vs. 9.8% cost of equity, fair P/TBV is 0.30x on $0.94 tangible book, implying $0.28 per share.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Return on equity (-6.0%) is below the minimum investors require (9.8%). This means the bank is worth less than the net assets on its books.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly