COMCEC Financial Outlook 2018
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Bank Return on Asset (ROA) is another indicator used to measure the efficiency of the financial
intermediaries. This is calculated as a ratio of commercial banks’ after-tax net income to yearly
averaged total assets. This indicator measures the profitability of a company relative to its total
assets. Therefore, it gives an idea about the efficiency of a financial intermediary on using its
assets to generate earnings. The higher ratio indicates better performance for individual
corporations and banks as well as for the financial system as a whole.
Figure 8: Bank Return on Assets (ROA) (%, after tax)
Source: Authors’ calculation from the World Bank Database
As shown in the above Figure, OIC average ROA data is similar to the world average. Lower AOR
data could be interpreted as the efficiency of economies. Also, this situation could also be
explained by weak asset base of financial intermediaries, lack of competition and shallow
structure of the market. The World average, which was realized as 1.4 percent in 2012,
decreased over the selected period and reached 1.2 percent in 2016. During the same period,
the OIC average decreased from 1.6 to 1.2 percent. ROA for OIC-HIG group performed better
than all other countries and realized at 1.5 percent in 2016.
Bank Return on Equity (ROE) is another ratio used to measure the efficiency of financial
intermediaries. The ROE measures a corporation's profitability by revealing how much profit a
company generates with the money shareholders have invested. It is calculated as a ratio of
commercial banks’ after-tax net income to yearly averaged equity.
The Figure below shows the ROE data for OIC income groups and the World average
performance during 2012-2016, when the OIC group recorded a better performance than the
world. World average increased to 11.5 percent in 2016. It was 10.5 percent in 2015. OIC-LIG
countries had the highest rates across the OIC income groups. ROE for OIC-LIG countries
accounted for 15.7 percent in 2016.
0,0
0,5
1,0
1,5
2,0
OIC-LIG OIC-LMIG OIC-UMIG OIC-HIG OIC-Average World Average
2012 2013 2014 2015 2016