o_19heefouak9i9v4do11ac41pi7a.pdf

DEVELOPMENT BANKING IN GREECE 1963-2002
Taking into account all sources of revenue and assets, return on total assets
(ROTA) (Singh, Arora and Anand, 1991) 3 is calculated by adding net profits 4 and
financial expenses and then dividing the result by the sum of capital and reserves
plus total borrowings 5 .
As can be seen from Figure 2, ROTA follows a rising trend for ETEBA from a
low value of 1-2% (0.01 to 0.02) in 1964-65 to a high of 21-22% (0.21-0.22) during
the period 1991-93. The rising trend is even more pronounced for Investment Bank
whose indicator, starting from negative rates of return for the two first years of its
operation, reaches 0.20 or 20% for the year 1990 and even 0.42 or 42% for 1991
and 0.35 or 35% for 1992. However, if we do not take into account these extreme
figures during the early 1990s the return on Bank’s total assets –in accounting
terms– is quite similar to that of ETEBA. The picture is different for ETBA. The
bank sees rising returns –with minor fluctuations– till 1987, with figures starting
from 0.03 (3%) and reaching 0.11 (11%). However, subsequently and till 1993, the
trend is falling as the return on total assets decreases from 11% to 3%.
Figure 2: Returns on total assets
Source: Author’s calculations
However, taking the average figures for the three sub-periods gives a more meaningful
picture. Hence, as Table 2 shows, ETEBA’s average return rises with small
3 Singh et al. (1991) calculate this ratio as ‘Return on Investment (ROI)’.
4 In our case net profits are before tax profits.
5 However note that in our case ‘debt’ pertains only to long-term debt plus bond issues.
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