Return on EquityROE

ROE is the return shareholders actually earn on their capital. It is calculated as net profit after tax (less preference dividend, if any) divided by average shareholders' equity. Shareholders' equity includes paid-up capital, share premium, retained earnings and reserves.

For a bank, ROE depends on two things: how profitably assets are used (ROA) and how much leverage the bank uses (assets per rupee of equity). The DuPont identity breaks it down as ROE = Net profit margin × Asset turnover × Equity multiplier.

A very high ROE is not always good. It may come from thin capital rather than strong earnings, which is why regulators pair it with the capital adequacy ratio. A falling ROE after a bank raises fresh capital (for example to meet a higher paid-up capital requirement or after a merger) is common, because equity rises before profits catch up.

Investors compare ROE with the required rate of return; when ROE exceeds the cost of equity, the bank creates value for shareholders.

ROE ले शेयरधनीले आफ्नो पुँजीमा वास्तवमा कति प्रतिफल पाए भन्ने देखाउँछ। करपछिको खुद नाफा (अग्राधिकार लाभांश घटाएर) लाई औसत शेयरधनी कोषले भाग गरिन्छ। शेयरधनी कोषमा चुक्ता पुँजी, शेयर प्रिमियम, सञ्चित नाफा र जगेडा पर्छन्।

बैंकको ROE सम्पत्तिको नाफामूलक उपयोग (ROA) र लिभरेजमा निर्भर हुन्छ। DuPont विश्लेषणअनुसार ROE = खुद नाफा मार्जिन × सम्पत्ति आवर्तन × स्वपुँजी गुणक। अत्यधिक ROE कमजोर पुँजीका कारण पनि हुन सक्ने भएकाले यसलाई पुँजी पर्याप्तता अनुपातसँगै हेरिन्छ। नयाँ पुँजी थप वा गाभिएपछि ROE घट्नु सामान्य हो।