Traditional Measures of Profitability in Banking

Traditional measures of profitability in the banking sector are fundamental financial ratios and metrics used to evaluate a bank’s capacity to generate earnings. These measures—such as Return on Assets (ROA), Return on Equity (ROE), and Net Interest Margin (NIM)—provide insights into how efficiently a bank utilizes its resources, including assets and equity, as well as…

Profit and Profitability in the Context of Banking

In banking terminology, profit refers to the financial surplus remaining after all operating expenses, provisions, depreciation, and taxes have been deducted from total revenue. Profitability, on the other hand, is a broader measure of a bank’s efficiency in generating profit relative to its assets and expenses, and it serves as a key indicator of the…