Some valuation measures are inappropriately applied to banks.
Unlike manufacturing firms that invest in plant, equipment and other fixed assets, financial service firms invest primarily in intangible assets such as brand name and human capital, its employees. However, these intangible investments for future growth, often are categorized as operating expenses in accounting statements when in actuality they are assets. Firm value multiples such as Value to EBITDA or Value to EBIT cannot be easily adapted to financial service firms, because neither value nor operating income can be easily estimated for banks.
Also, book value of equity can be affected by stock buybacks and extraordinary or one-time charges. The book value of equity for banks that have one or both may understate the equity capital invested in them. Source: NY Uni. Just as newpikachu posted: “It is notoriously hard to value banks.”