203. For the purposes of pricing and measuring profitability, including cross-subsidisation between …

For the purposes of pricing and measuring profitability, including cross-subsidisation between loans or business units/lines, institutions should consider and account for risk-adjusted performance measures in a manner that is proportionate to the size, nature and complexity of the loan and the risk profile of the borrower. Such performance measures could include economic value added (EVA), return on risk-adjusted capital (RORAC) and risk-adjusted return on capital (RAROC), return on risk-weighted assets (RORWA), return on total assets (ROTA) and other measures that are relevant to the characteristics of the loan. Risk-adjusted performance measures may also depend on and reflect institutions’ capital-planning strategies and policies.

1. Overview

1.1 References

1.2 Identified Requirements

1.3 Related Standards

2. Identified Requirements

3. Related Standards

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