EBA Long Report - European Banking Authority - Europa

Your bank can operate on a longerterm
basis with a return on equity
(ROE):
a. Below 10%.
b. Between 10% and 15%.
c. Above 15%.
In your financial planning you
estimate your bank’s cost of equity
(COE).
a. If yes, you estimate it at:
i. Below 10%.
ii. Between 10% and 12%.
iii. Above 12%.
Figure 4: Return on Equity (source: KRI) - 5 th and 95 th percentiles, interquartile range and median
60%
40%
20%
0%
-20%
-40%
-60%
-80%
-100%
Most respondents to the RAQ consider a RoE value in the range of 10%-15% as the target for the
long-term viability of their businesses, as shown in the following chart. Most respondents that calculate
their Cost of Equity believe it to be in the 10%-12% range.
Figure 5: Return on Equity and Cost of Equity (source: RAQ)
35
30
25
20
15
10
5
0
ROE and COE
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