Bank Stock Intrinsic Value Calculator

Advanced Residual Income Model for Banks with Irregular Dividends

Dividend-Irregularity Adjusted
Sensitivity Analysis
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How to Use This Calculator

1

Select Currency

Choose your preferred currency (GHS or USD) for all calculations and results.

2

Select Forecast Period

Choose a forecast period of 3-5 years based on the reliability of your forecasts. Longer periods are more speculative but can capture more growth.

3

Enter CAPM Inputs

Provide the risk-free rate (government bond yield), expected market return, and the stock's beta. These determine your required rate of return.

  • Risk-Free Rate: Yield on long-term government bonds (e.g., 5-10 year)
  • Market Return: Expected annual return of the stock market
  • Beta: Stock's volatility relative to the market (find on financial websites)
4

Enter RIM Inputs

Input the current book value per share and forecasted ROE for each year. Select the appropriate dividend policy for the bank.

  • Book Value: From the latest balance sheet (Total Equity / Shares Outstanding)
  • ROE Forecast: Based on historical performance and future expectations
  • Dividend Policy: Select the appropriate option for the bank
5

Terminal Value Assumptions

Provide the long-term growth rate and sustainable ROE for the terminal value calculation. These should be conservative estimates.

Critical Rule: Long-Term ROE must be higher than your calculated Cost of Equity to create value in perpetuity.
  • Terminal Growth Rate: Should be less than the overall economic growth rate
  • Long-Term ROE: The sustainable return on equity in perpetuity
6

Optional: Market Price

Enter the current market price to compare with the calculated intrinsic value and determine the margin of safety.

7

Calculate & Interpret

Click "Calculate" to see the intrinsic value and sensitivity analysis. Use the results to make informed investment decisions.

  • Intrinsic Value: The estimated true value of the stock
  • Margin of Safety: Difference between intrinsic value and market price
  • Sensitivity Analysis: How changes in assumptions affect the valuation

Calculate Bank Stock Intrinsic Value

This calculator uses an enhanced Residual Income Model specifically designed for banks with irregular dividend patterns.

Currency:
₵
GHS
$
USD

Enhanced RIM Formula for Irregular Dividends

IV = BV₀ + Σ[ (ROE - r) × BVt-1 / (1+r)t ] + TV / (1+r)n

Where ROE is return on equity, r is cost of equity, BV is book value, TV is terminal value

Cost of Equity (CAPM)

Yield on long-term government bonds (e.g., 5-10 year bond yield)
Expected annual return of the stock market
Stock volatility relative to the market

Residual Income Inputs

For irregular dividends, use historical average or expected future payout ratio

Forecasted Return on Equity (ROE) by Year

Terminal Value Assumptions

Important: Long-Term ROE must be higher than your calculated Cost of Equity to create value in perpetuity.
Must be higher than Cost of Equity to create value
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