Banks cannot be valued with a DCF. The reason is not that they don't produce cash flow — they produce vast amounts of it — but that the "free" in free cash flow doesn't apply. A bank cannot distribute its operating cash flow without violating capital adequacy. Growth and distribution are, structurally, in trade-off.

The model uses the framework that bank analysts actually use: a residual income model built on ROE, with NIM as the primary driver and capital adequacy as the constraint on growth.