Return-on-equity ratio can show how efficient banks are

THE efficiency of local banks can be measured through the use of the return-on-equity (ROE) ratio, which shows to what extent banks use reinvested earnings to produce future profits.

The trend in the ROE metric has improved significantly since the Asian financial crisis of 1997-98. For example, the banking sector’s ROE hit a low of 9.8% in 1997. However, the figure improved to 19.7% in 2007.