The valuation of a bank based on prominent firm valuation methods: Tekstilbank case study

The aim of this study is to analyze the market values of banks in Borsa Istanbul Corporate indices on their financial statements. In order to fulfill this aim, a sample bank has been analyzed on prominent approaches of the literature such as discounted cash flow model, the model of economic value added, P/B and P/E ratios. On the next steps, a relation between market value of the bank and the outcomes of valuation process have been examined. In the first chapter, emergence and development of valuation is revealed and mentioned. Then, sources and approaches about firm valuation are studied in details. According to them, the most appropriate methods for bank valuation process are asserted through the following chapters. The result of this study highlights that the sample bank has been sold by a lower price according to the valuation calculations. Furthermore, the bank has been priced under its fair value. Key words: Valuation, Valuation Methods, Bank Valuation, Price Per Share, Undervaluation.