The control of profit and value creation
There are just a few key concepts or building blocks to keep in mind. At the overall bank level, senior management needs to ensure that:
Market value of shares > equity invested by shareholders
Technically, this demands that the long-term return on equity exceeds the cost of equity:
Return on equity (ROE) > cost of equity (COE)
where the cost of equity represents the expected return that shareholders could obtain from alternative investment opportunities.
At profit centre level, a measure of performance ...
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