o_19heefouak9i9v4do11ac41pi7a.pdf

KONSTANTINOS I. LOIZOS
standard deviation between the periods. However, the same picture –of rising average
returns– is obtained for Investment Bank, although in this case the variability of
this ratio, especially for the last period, is much larger than that of ETEBA. In addition,
observe the stability of average ROTA, at 8% for ETBA during the last two periods
with small standard deviation.
Table 2: Return on total assets: summary statistics
ETEBA Investment Bank ETBA
1964-74 1975-86 1987-93 1963-74 1976-86 1987-92 1967-74 1975-86 1987-93
Mean 0.05 0.11 0.18 0.03 0.11 0.24 0.04 0.08 0.08
Median 0.05 0.11 0.17 0.04 0.13 0.19 0.03 0.09 0.09
Std. Dev. 0.02 0.02 0.03 0.04 0.03 0.12 0.02 0.02 0.03
Min. 0.01 0.08 0.15 -0.06 0.07 0.13 0.03 0.04 0.03
Max. 0.07 0.13 0.22 0.08 0.14 0.42 0.08 0.11 0.11
However, the general picture that we obtain from this measure of performance is
that the returns on the banks’ assets –irrespective of the net profitability of the
banks themselves when the various costs were deducted– were quite high and positive
for all three of them.
Is the previous picture maintained if we focus on the return as a percentage of
total earning assets only? We introduce this ratio both to correct for possible biases
in ROTA (as ‘debt’ in its denominator pertains only to long-term debt) and to cover
a more extended period in the operation of the banks. Return on earning assets
(ROEA) is calculated by dividing the sum of net profits and financial charges by total
earning assets, that is, the sum of long- and medium-term loans till 1991-92 or
of long- and short-term loans in subsequent years plus total investment in securities.
In addition, this measure, because of the availability of data, covers the whole
period of operation of the three banks.
Figure 3 shows the evolution of this ratio. The picture is quite interesting, especially
for the period not captured by the ROTA measure. ETEBA’s ROEA rises, more or less
steadily, until 1994, from a figure of 4% (0.04) in 1965 to 33% (0.33) in 1994. But subsequently
this return falls to 14% in 1996 and 1999 and to only 9% in 2001. On the
other hand, Investment Bank sees its ROEA rise up to 0.39 or 39% in 1991 and even
52% in 1997 –excluding the extreme value for 1996. ETBA exhibits a less clear pattern
with an ROEA that rises with fluctuations until 1987 when it reaches 14% (0.14). Then,
after a large fluctuation that also includes negative values for the years 1996 and 1997,
this rate of return stabilizes to the level of 4-6% during the last two years of operation.
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