How do you find the cost of equity for a bank?

Use an equity-only approach. For a bank, debt such as deposits is part of the business itself, so WACC does not work well. Most analysts estimate cost of equity directly with CAPM, using a bank beta, and discount dividends or cash flow to equity at that rate.

The math is the same as for any listed company. A bank stock with a beta of 1.1 gets 5% plus 1.1 times 5%, or 10.5%. Bank betas already reflect heavy borrowing, so analysts usually skip unlevering and relevering, and many prefer an average beta across peer banks over one noisy regression.

Banks often pay steady dividends, so the dividend discount model is a common cross-check. Compare the result with return on equity: a bank earning more than its cost of equity tends to trade above book value. See cost of equity vs WACC for why the blend is skipped.