Return on assets for a bank

Net profit as a percentage of average total assets, the primary profitability measure for a lender because the balance sheet is the business.

A bank earning ₹720 crore on ₹60,000 crore of assets returns 1.2%. Above 1% is good and above 1.5% is excellent, and those thresholds hold across markets.

The reason to prefer it to return on equity for a bank is leverage. A bank is levered ten to twelve times by design, so return on equity can be made to look strong by taking more risk, while return on assets cannot.

Multiply return on assets by the leverage multiple and you have return on equity. Both numbers, one identity.

One per cent is the line. It always has been.