Bank Profitability

From Open Risk Manual

Definition

Bank Profitability is assessed through current earnings but also through the breakdown of income, costs, impairment provisions, and consideration of how they have evolved over the years.

Regulatory Expectations

Bank profitability is examined in the context of the SREP. Supervisors may take into account environment changes, such as technological changes, and how these may impact future bank profitability. Some supervisors may also conduct horizontal reviews to understand a bank’s financial performance and the degree to which it is driven by its Risk Appetite, including relative to peers.[1]

References

  1. Basel Committee on Banking Supervision, "Overview of Pillar 2 supervisory review practices and approaches", June 2019

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