How do you read Return on equity (lenders)?

15% or more is good. Between 10% and 15% is ordinary, and below 10% the lender is not earning its cost of capital. On the scale used here, below 10% reads as weak, 10% to 15% reads as ordinary, and 15% and above reads as good. Higher is usually better.

Return on equity (lenders), explained

What is Return on equity (lenders)?

A lender's net profit as a share of its shareholders' funds, worked out from the same accounts as the other lender figures.

A lender grows by lending more, and regulators require capital behind every loan. Profit kept in the business is the cheapest source of that capital. A lender earning 16% on equity and paying out little can grow its book about 14% a year without diluting shareholders; one earning 8% has to keep selling new shares.

The same ROE can come from a strong business with modest leverage or a weak one with heavy leverage. Split it into ROA and assets to equity before trusting it.

How it is calculated

ROE = net profit ÷ average shareholders' equity. For a lender it equals ROA × (assets ÷ equity).

A worked example

Profit of ₹1,300 Cr on average equity of ₹9,000 Cr: ROE = 14.4%.

Why does Return on equity (lenders) matter?

It is the return the owners earn, and it decides how fast the lender can grow its loan book without raising new capital.

What is a good Return on equity (lenders)?

15% or more is good. Between 10% and 15% is ordinary, and below 10% the lender is not earning its cost of capital.

Above 15% sustained through a credit cycle is the mark of a strong franchise. Price to book follows it closely: lenders that earn well above their cost of equity trade at a premium to book value.

Reading scale

In %

Weak

Ordinary

Good

0%10%15%22%+

On the scale used here, below 10% reads as weak, 10% to 15% reads as ordinary, and 15% and above reads as good.

Higher is usually better.

What are the common mistakes with Return on equity (lenders)?

Ignoring how much leverage produced it.

Reading a year with unusually low provisions as normal.

What is a typical Return on equity (lenders) in India today?

The median across the 952 listed companies that report it, as of 12 Oct 2026. Half sit above each figure and half below.

By company size

Median

Large Cap · 27 companies15.9%

Mid Cap · 33 companies13.9%

Small Cap · 892 companies3.4%

By industry

Median, largest industries first

Private Sector Bank · 2012.4%

Public Sector Bank · 1214.3%

Non Banking Financial Company (NBFC) · 739.4%

Investment Company · 411.2%

Asset Management Company · 930.3%

Holding Company · 129.1%

Stockbroking & Allied · 3210.7%

Housing Finance Company · 1413.3%

Financial Technology (Fintech) · 139.7%

Other Bank · 97.6%

Compare a company with its own industry before the whole market. Every industry, and each company's rank within it, is in the screener.

Is this lender sound, and does it earn enough for the risk it takes?

A bank's raw material is other people's money, so the ratios that judge a factory misread it. These are the figures that matter for banks, NBFCs and housing finance companies: what they earn on lending, how many loans have gone bad, how well they are cushioned against losses, and how cheaply they fund themselves.