The Use of ROA and ROE in Study of a Bank's Profitability

Irena Munteanu, Constantina Alina Ilie
2021 Ovidius University Annals: Economic Sciences Series  
Bank profitability has been and will continue to be a topic of interest for all the actors in corporate banking governance. During this period, the banking sector is facing the double challenge of sustaining credit flow in the new macroeconomic conditions characterized by a high degree of uncertainty and managing rising financial risks. Shareholders are preoccupied with the return on investment, the management with result commitments, the monetary authority with ensuring stability in the
more » ... sector. This paper presents an analysis of bank profitability applied to a commercial bank in Romania. We will carry out the calculation and interpretation of the indicators and the positioning of the bank in relation to the system. The analyzed bank is situated above the sector's average. According to the obtained results, the Romanian banking sector has been standing at the highest level in terms of profitability according to the EBA (European Banking Authority) classification, in terms of ROE. Being a classic model of analysis, the study can be developed, applied to and adapted for other banking institutions. We believe that this paper is useful for young researchers and analysts.
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