The commercial banking industry consists of companies acting as financial intermediaries, collecting funds from depositors, and investing those funds in loans and securities. In addition to their credit business, banks also offer a variety of non-credit related services to their retail and commercial and corporate banking clients. Below is the current consensus forecast data on financials, such as pre-tax provision earnings, net loans and total deposits; profitability, including net interest margin, efficiency ratio and return on average assets; asset quality; and capital adequacy, such as CET1 and Tier 1 capital ratio. These key commercial banking metrics aid market participants in identifying commercial banking industry trends and future performance of diversified and regional banks, such as China Construction Bank, Wells Fargo, Banco Santander and State Bank of India. View all commercial banking resources >
What are the most important commercial bank KPIs?
Key performance indicators (KPIs) are the most important business metrics for a particular industry and are where investors should look to find an investment edge. When understanding market expectations for the commercial banking industry, whether at a company or industry level, here are some of the commercial banking KPIs to consider:
- Net Interest Margin (NIM)
- Average Earning Assets
- Non-Performing Loans (NPLs)
- NPLs % Loans
- NPLs % Allowance for Loan Losses
- Return on Assets
- Return on Equity
What questions do these key commercial bank metrics answer?
With Visible Alpha’s diversified and regional bank forecast data, you can discover:
- Which banks generate the highest profits at the pre-tax, pre-provision level?
- Which banks have high credit losses?
- Which commercial banks have the highest amount of deposits?
- Which banks have the highest net interest margin (NIM)?
- What bank is expected to have the lowest NPL ratio next year?
- Which bank has the highest CET1 capital ratio? Which bank is expected to have the highest CET1 ratio next year?
- In the next two years, which bank is expected to have the least exposure to risky assets?
How can this data be used?
By opening up forecast data on key commercial banking KPIs, Visible Alpha is enabling institutional investors, retail investors, business reporters, students and more to quantify and compare market expectations for companies across the commercial bank industry.
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This guide highlights the key performance indicators for the commercial banking industry and where investors should look to find an investment edge, including:
- Banking Industry Business Model & Diagram
- Key Commercial Banking Metrics PLUS Visible Alpha’s Standardized Industry Metrics
- Available Comp Tables
- Industry KPI Terms & Definitions
Earning Asset Yield (EAY)
A measure of the interest yield generated by a bank’s interest-earning assets. It is defined as interest income divided by average earning assets.
Cost of Funds (COF)
A measure of the cost of funding a bank’s interest-bearing liabilities. It is defined as interest expense divided by average interest bearing liabilities.
Net Interest Margin (NIM)
Measures the net profitability of the bank’s spread business. It is defined as net interest income divided by average earning assets.
Average Earning Assets
The assets that generate interest income and are often calculated on a daily basis
Average Interest Bearing Liabilities
The liabilities that incur interest expenses and are often measured on a daily basis
Non-Interest Income/Total Revenue
The ratio of non-interest sources of income relative to total revenue
Non-Interest Expenses/Total Revenue
The ratio of non-interest expenses relative to total revenue
The loans classified as past due
NPLs % Loans
An asset quality ratio that measures the relative prevalence of non-performing loans in the loan portfolio
NPLs % Allowance for Loan Losses
A ratio that measures the level of reserves set aside for credit losses (NPLs)
PCL % Average Total Loans
A measure of credit losses relative to the size of the loan portfolio
Common Equity Tier 1 Capital Ratio
A regulatory ratio that measures the capital adequacy of a bank
Return on Assets
An asset-based measure of returns defined as net income/assets (average or end of period)
Return on Equity
An equity-based measure of returns defined as net income/equity (average or end of period)
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