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Financial ratios

30 Jan 2020

ROE stands for “Return on Equity” and is the most used measurement of a company's profitability. It is calculated by dividing the company’s net income by shareholder equity (or the company’s assets minus its debt).

27 Jan 2020

To calculate a bank's relative productivity, the market uses what is called an efficiency ratio. This indicator calculates the income earned for the expenses required to achieve said income over a given period of time. An institution's efficiency ratio, expressed as a percentage, is the result of the ratio between operating expenses and the gross margin. For example, if the efficiency ratio is 60% it means that to earn 100 euro, an institution needs to spend 60. Therefore, the lower the percentage, the more efficient the institution.

19 Nov 2019

02 Aug 2019

The Basel Committee has designed two liquidity ratios to ensure that financial institutions have sufficient liquidity to meet their short-term and long-term obligations: LCR and NSFR. These two requirements are intended to reduce risks in case of episodes of financial turbulence.

29 Apr 2019

02 Nov 2018

BBVA has once again excelled in EU-wide bank stress tests thanks to its resilience in the face of potential economic shocks. According to the exercise results, published today, BBVA would reach a fully loaded CET1 capital ratio of 8.80 percent in 2020 under the adverse scenario. The bank would also have the second least negative impact among its peers between the initial ratio in 2017 and the final ratio in 2020 (1.93 percentage points). Among big European banks  assessed, BBVA is one of the few banks with the ability to generate an accumulated profit in the three-year period under analysis (2018, 2019, and 2020), under the adverse scenario.

27 Jul 2018

01 Feb 2018

27 Oct 2017

  • Operating income: Recurring revenues continued their upward trend, growing 4.2% between January and September. This, together with cost containment efforts (expenses dropped 1.7% in the year to September), drove operating income to a record €9.52 billion
  • Risks: The NPL ratio continued to improve, reaching 4.5% in September (vs. 4.8% in June), the lowest level in the past five years. Coverage increased to 72%
  • Capital: The fully-loaded CET1 ratio rose to 11.2% in September, reflecting a capital generation of 30 basis points in the first nine months of the year
  • Transformation: The digital customer base grew 24% y-o-y to 21.1 million in September. Of these, the number of customers banking with their smartphones surged 43% to 15.8 million

18 Sep 2017

The EBA recently completed its latest monitoring exercise to assess EU Banks’ capital, leverage, and liquidity ratios assuming full implementation of the CRD IV-CRR/Basel III framework.  Overall, the results show that, between June and December of 2016, there was an improvement in both CET1 capital and liquidity ratios.

27 Jun 2017

27 Apr 2017

01 Aug 2016

There is a sea of acronyms to measure profitability. Some are more widely known in the industry, such as ROE, ROTE or ROA. However, the more r’s they have, the more complicated things get (RORWA, RAROC, RORAC, RARORAC). But, which ratio is the most reliable to measure a bank’s profitability?  Let’s go over each one of them to understand their meaning and apply the most appropriate one in each case.

29 Jul 2016