It is no secret that the valuation of any stock is based on the company's income and dividends, which confirm the reality of this income for shareholders.

And we have to solve the problem of finding a formalized scheme that prescribes the possibility of paying dividends depending on the economic state of the company.

Despite popular belief, income alone is not the end result for evaluation.

This is just one vector describing the physics of the process.

Another vector is the potential remaining in the company to generate revenue in the future.

Very often we called this a risk assessment.

And just as the income is known to everyone, so the future risk is unknown to anyone.

So, for an assessment, the main task is to determine the risk based on the existing condition.

To solve this problem, we need to determine the condition as corresponding to the norm and evaluate the deviation from this norm.

What is a normal state for banks that does not create any risks?

I think it could be the equality of the bank's liabilities and the bank's liquid assets.

The bank's liabilities are directly reflected in the balance sheet.

We can accept all funds as liquid assets of the bank, except for issued loans, this is an obvious risk.

Thus, our coefficient for risk assessment is as follows.

Monetary risk = (balance sheet – loans issued ) / liabilities.

But this is only one part of the risk, which reflects the monetary risk.

The other part relates to equity risk.

So, we need to determine the normal state of equity adequacy and the limits of its deviation.

The minimum value is set to 8%, and we will consider 15% as the normal value.

So, we have a norm of 15% and a deviation from this norm of 7%.

Thus, the second risk coefficient is equal to =

Capital adequacy risk = 1- (0,15 - equity adequacy) / 0,07

So, we have obtained a formula for describing possible bank dividends.

Shareholders' income or dividends = Cash flow * Monetary risk * Capital adequacy risk.

Now let us confirm this in practice using the example of Sberbank.

The dividend line and the line obtained by the proposed formula are shown in the figure below.

Figure 1.

These two lines have some common features, but it seems that our calculation is the upper limit for dividends.

Recall that cash flow is income without accrued reserves and taxes, so we can substitute net profit in our formula as the second income option.

We get this as the third line in the figure.

Figure 2.

Previously, this line described dividends very well, but now it has become the lower limit of possible dividends.

Something has changed in the bank's dividend policy, and we can assume that they are slightly overstated.

In any case, we now have a good tool for evaluating the bank's shares.