Australian (ASX) Stock Market Forum

ROE & ROA?

sjx

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Oct 1, 2008
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Hi everyone,

Can anyone comment on what a suitable Return on Equity (ROE) and Return on Assets (ROA) ratio would be for the Australian banks?

While this may be more difficult, can anybody comment on what a nice Provision for Loan Loss (PLL) ratio would be? :)

regards,
sam
 
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As far as ROA/ROE for a commercial bank, less than 1% ROA is acceptable, ROE should be around 10%+, massive leverage multiplier.... (Assets/Equity)

When you refer to the (PLL) Do you mean (provision for doubtful debts)/(Loan Portfolio)?

The banks grade each loan they have... they have good quality portfolios, which they apply a very low provision to, and each lower grade the percentage of provision increases... I would say that for a low doc portfolio in the current climate a 30% provision would not be out of the question... as for no doc potentially 95%-100%... but it all depends on the loan quality...
 

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