Apart from interest income, banks earn revenue in the type of fees that they charge for various services. For instance, banks also deal in overseas trade operations and act as a broker and earn forex charges. They earn fee by selling mutual funds and insurance to their clients.
Global Core Banking Distributors & Landscape Report Q1 2022
Banks create allowances for bad debt that they expect to write down off. Depending on whether the bank is conservative or aggressive in its loss provision policy, the P/E and P/B ratios vary across banks. Financial institutions which might be conservative of their loss provision estimates are most likely to have larger P/E and P/B ratios, and vice versa. When funding professionals evaluate banks, they are confronted with bank-specific issues corresponding to how to measure debt and reinvestment wants.