National Australia Bank Ltd (ASX: NAB) shares have made a name for themselves over the past year or two as the frontrunner of the ASX banking sector.
Consider this. The NAB share price has gained a pleasing 9% over 2022 so far, and a similar amount over the past 12 months. In contrast, Commonwealth Bank of Australia (ASX: CBA) shares are up less than 1% year to date, and down 3.5% over the past 12 months.
Westpac Banking Corp (ASX: WBC) shares are doing slightly better in 2022, with a gain of 10%. But that still leaves this bank down almost 9% over the past year.
And Australia and New Zealand Banking Group Ltd (ASX: ANZ) shares are down 9% over the year to date, and have lost 11% over the past 12 months.
So that leaves NAB as a clear winner, at least over these periods.
Traditionally on the ASX, CBA has commanded the largest pricing premium over its rivals. But have these outsized gains from NAB stolen CBA's crown?
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Are NAB shares more expensive than CBA?
Well, there are a couple of ways to measure a company's 'expensiveness' in its sector. A favourite method is the price-to-earnings (P/E) ratio.
At present, CBA's P/E ratio is sitting at 18.8. NAB's is at 15.95, with Westpac and ANZ at 17.42 and 11.44, respectively. So using that metric, NAB doesn't even make second place.
But there is another method that can be used, which is perhaps more potent in valuing a bank specifically: the price-to-book (P/B) ratio.
This measures a company's market capitalisation (price) against its book value. Book value is basically the value of all of a company's assets on its balance sheet, minus its liabilities.
Book value is especially useful for a bank, given most of its assets (loans, mortgages etc.) and liabilities (deposits) are very easy to accurately account for.
So when it comes to the P/B ratio, ANZ again comes out on the bottom, with a P/B ratio of 1.1. Westpac is just ahead with a P/B of 1.2.
But NAB again is playing second fiddle to CBA. Its current ratio is 1.6, whereas CBA boasts a far more impressive 2.4.
So we can comprehensively conclude that NAB's recent run of share price gains still puts it nowhere near the 'most expensive' ASX bank share. No matter which metric we use, that title remains the property of Commonwealth Bank of Australia.
