Valorisation d'une banque - modèle excel

Dividend Discount Model
Assumptions
1. The firm is expected to grow at a higher growth rate in the first period.
2. The growth rate will drop at the end of the first period to the stable growth rate.
3. The dividend payout ratio is consistent with the expected growth rate.
Inputs needed
1. Length of high growth period
2. Expected growth rate in earnings during the high growth period.
3. Dividend payout ratio during the high growth period.
4. Expected growth rate in earnings during the stable growth period.
5. Expected payout ratio during the stable growth period.
6. Current Earnings per share
7. Inputs for the Cost of Equity
How the model worksThe expected dividends are estimated for the high growth period, using the payout
ratio for the high growth period and the expected growth rate in earnings per share.
The expected growth rate is estimated either using fundamentals:
Expected growth = Retention Ratio * Return on Equity
Alternatively, you can input the expected growth rate.
At the end of the high growth phase, the expected terminal price is estimated using
dividends per share one year after the high growth period, using the growth rate
in stable growth, the payout ratio in stable growth and the cost of equity in stable
growth.
The dividends per share and the terminal price are discounted back to the present at
the cost of equity changes.
If your cost of equity in stable growth is different from your cost of equity in high
growth, the cost of equity in the second half of the stable growth period will be
adjusted gradually from the high growth cost of equity to a stable growth cost of
equity.
Options Available
You can make this model into a three stage model by answering yes to the question
of whether you want me to adjust the inputs in the second half of the high growth
period. If you do, I will adjust the growth rate, the payout ratio and the cost of
equity from high-growth levels to stable growth levels gradually.
You can also make this a stable growth model by setting the high
growth period to zero.

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Inputs from current financials
Net Income =
$4 791,00
Last year
(in currency)
Book Value of Equity =
$17 997,00
$15 518,00 (in currency)
Current Earnings per share =
$4,75
(in currency)
Current Dividends per share =
$0,92
(in currency)
Number of shares outstanding =
1120,713
Do you want to normalize the net income/earnings per share?
No
Inputs for Discount Rate
Beta of the stock =
1,1500
Riskfree rate=
5,00%
(in percent)
Risk Premium=
4,00%
(in percent)
Inputs for High Growth Period
Length of high growth period
10
Enter the inputs for fundamental growth and book value of equity
ROE =
30,87%
(in percent)
Retention =
80,63%
(in percent)
Do you want to change any of these inputs for the high growth period?
Yes
If yes, specify the values for these inputs (Please enter all variables)
ROE =
25,00%
(in percent)
Retention =
80,63%
(in percent)
Do you want to change any of these inputs for the stable growth peri
Yod?
es
If yes, specify the values for these inputs
ROE =
15,00%
(in percent)
Do you want me to gradually adjust your inputs during the second ha
Y l
e f
s ?
Inputs for Stable Growth Period
Enter growth rate in stable growth period?
5,00%
(in percent)
Stable payout ratio from fundamentals is =
66,67%
(in percent)
Do you want to change this payout ratio?
No
(Yes or No)
If yes, enter the stable payout ratio=
(in percent)
Will the beta to change in the stable period?
Yes
(Yes or No)
If yes, enter the beta for stable period =
1,10
Enter the risk premium to use in stable period =
4,00%

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Normalized Earnings Calculation
Choose the approach to normalized earnings
1
Approach 1: Average Net Income over last 5 years
-5
-4
-3
-2
Current
Average
Net Income
$1 662,00
$2 533,00
$1 876,00
$1 933,00
$2 122,00
$2 025,20
Approach 2: Normalized return on equity
Normalized ROE =
22%

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Return on Equity =
25,00%
Retention Ratio =
80,63%
Expected growth rate =
20,16%
Cost of equity =
9,60%
1
2
3
4
5
6
7
8
9
10
Terminal Year
Net Income
$4 499,25
$5 406,20
$6 495,98
$7 805,43
$9 378,85
$10 367,87
$11 015,91
$11 258,43
$11 073,41
$10 481,45
$11 005,52
- Equity Cost (see below)
$1 727,71
$2 075,98
$2 494,46
$2 997,29
$3 601,48
$4 309,43
$4 993,88
$5 617,36
$6 149,00
$6 568,38
$6 896,79
Excess Equity Return
$2 771,54
$3 330,22
$4 001,52
$4 808,15
$5 777,37
$6 058,44
$6 022,03
$5 641,06
$4 924,41
$3 913,07
$4 108,73
Terminal Value of Excess E
quity Return








$93 380,20
Cumulated Cost of Equity
1,09600
1,20122
1,31653
1,44292
1,58144
1,73263
1,89757
2,07746
2,27357
2,48729
Present Value
$2 528,78
$2 772,38
$3 039,44
$3 332,23
$3 653,23
$3 496,68
$3 173,54
$2 715,36
$2 165,93
$39 116,18
Beginning BV of Equity
$17 997,00
$21 624,82
$25 983,92
$31 221,74
$37 515,38
$45 077,69
$52 456,70
$59 254,87
$65 137,70
$69 876,34
$73 370,15
Cost of Equity
9,60%
9,60%
9,60%
9,60%
9,60%
9,56%
9,52%
9,48%
9,44%
9,40%
9,40%
Equity Cost
$1 727,71
$2 075,98
$2 494,46
$2 997,29
$3 601,48
$4 309,43
$4 993,88
$5 617,36
$6 149,00
$6 568,38
$6 896,79
Return on Equity
25,00%
25,00%
25,00%
25,00%
25,00%
23,00%
21,00%
19,00%
17,00%
15,00%
15,00%
Net Income
$4 499,25
$5 406,20
$6 495,98
$7 805,43
$9 378,85
$10 367,87
$11 015,91
$11 258,43
$11 073,41
$10 481,45
$11 005,52
Dividend Payout Ratio
19,37%
19,37%
19,37%
19,37%
19,37%
28,83%
38,29%
47,75%
57,21%
66,67%
66,67%
Dividends paid
$871,43
$1 047,10
$1 258,17
$1 511,79
$1 816,53
$2 988,86
$4 217,74
$5 375,60
$6 334,77
$6 987,63
Retained Earnings
$3 627,82
$4 359,11
$5 237,81
$6 293,64
$7 562,31
$7 379,01
$6 798,17
$5 882,82
$4 738,64
$3 493,82
Equity Invested =
$17 997,00
PV of Equity Excess Return = $65 993,76
Value of Equity =
$83 990,76
Number of shares =
1120,713
Value Per Share =
$74,94

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