Performance-oriented price, performance, determining the profitability of the bank. The first group includes measures such as EVA (Economic Added Value) - economic value added, SVA (Shareholder's Value Added) - added value of the share capital, etc. EVA indicator describes the ability of the bank to reach profitability is higher than the cost of capital. It is calculated as the difference between net income and capital value, multiplied by a reasonable level of shareholder return. On the basis of information obtained as a result of the calculation of the indicator EVA, you can make management decisions regarding the termination of banking activities that do not provide an increase economic value added. This creates prerequisites for the efficient reallocation of resources within the bank. It should be noted that the rate of SVA measures not only profitability but also the riskiness of the operations and activities of the business units of the bank. In contrast, the indicator EVA, which is calculated based on historical data, with the rate determined by the SVA future discounted cash flows of the bank. SVA index is calculated as the difference between the cost of capital, which is created by future investments and the carrying amount of the share capital of the bank. The main idea of this indicator is that the established relationship between risk and reward for him. In this case, the mechanism of capital allocation by risk-based units. Depending on the indicator is held in the bank managers incentives, thereby increasing their effectiveness, as well as set the relationship between return and risk of each transaction. Thus, evaluating the effectiveness of bank departments, is dependent on the contribution of each unit in the long term growth of SVA. Topic: Analysis of Controlling | Tags: banking system credit