The banking (R)evolution: a regulatory and business model view

mirco balatti

return on common equity Chart of the profitability — return on common equity — of the six big usual-suspect U.S. banks (JPMorgan, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, Morgan Stanley) for the last dozen years

Capital Rules Aren’t the Only Reason Banking Is Boring… Loosely speaking, the fall in return on assets — just profitability of actual business — accounts for about two-thirds of the drop in overall profitability; the increase in capital accounts for about one-third. The changes to the business of banking do seem to be more significant than the changes to its funding model, and just doing the same basic stuff with a lot more capital probably isn’t the future of banking.

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