methods using little income in the assessment of financial intermediaries. Are superseded by financial methods, particularly levered, as leverage has a completely different meaning for banks compared to corporate firms.
Dividend Discount Model
- Value = PV (Dividends maximum distribution)
- need to consider the part not distributable to regulatory constraints of capitalization.
- potential Dividends: cash remaining after investment
- Dividends potential, given the regulatory capital
- DIV (t) = Maximum dividend available for distribution is consistent with the capital.
- W = SUM [1
- TV = DIV (asymptotic) / (ke-g)
- g = growth rate (typically the estimated inflation rate)
- Dividend Plan
- DIV (t) = dividends from the business plan, consistent with regulatory requirements
- payout ratio, consistent with the past, sustainable future, conservative, consistent with the regulatory solvency ratio
- W = SUM [1
- Excess Capital = TV / (1 + Ke) ^ n
- Excess Capital = Maximum dividend available for distribution last year of the plan, consistent with regulatory requirements
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