Page 3 - Bank Financials (I)
P. 3
Return on Assets:
This number is similar to return on equity but it doesn’t
reflect the impact of a bank’s leverage. Because banks are
typically leveraged by a factor of 10 to 1, in order to
generate a 10% return on equity, a bank must earn the
equivalent of at least 1% on its assets. This has long been
one of the bank industry’s most commonly cited
benchmarks.
