As with most businesses, profitability is one of the most critical performance metrics for short-term and long-term financial health of financial institutions.
The following five aspects of profitability analysis are critical to creating and sustaining a profitability measurement program that can be used to drive decisions and improve financial performance.
- Funds Transfer Pricing
- Determine Dimensionality
- Approach - Top Down or Bottom Up
- Non-Interest Income and Expense Allocations
- Assignment of the Loan Loss Provision and Risk-Based Capital
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