The task of scrutinizing a bank might seem challenging, but in reality, there are just three aspects to consider before deciding on a new financial institution. Since modern banking started in 1865, over 17,300 banks have failed. To prevent investing in banks that could follow this pattern, investors are advised to solely concentrate on establishments with a track record of efficient operations and mindful risk management.
Hence, the first figure investors must observe while evaluating a bank’s stock is the institution’s lowest yearly return on equity since 2008. Should this number be in the negative, it’s a definite red flag that long-term investors should sidestep the bank entirely.
Discover more about which factors to scrutinize when determining your next banking choice at The Motley Fool.
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