Cathay Dupont Award: What is Behind Cathay General Bancorp’s (CATY) Superior ROE?

Over the past 12 months, Cathay General Bancorp (NASDAQ:CATY) generated an ROE of 9.8%, implying the company created 9.8 cents on every dollar of shareholders’ invested capital. While Cathay General Bancorp turned out to be more efficient than its industry, which delivered a Return on Equity of 9.3%, there are other factors to consider before we call it superior.

 

Peeling the layers of ROE – trisecting a company’s profitability

 

ROE ratio basically calculates the net income as a percentage of total capital committed by shareholders, namely shareholders’ equity. Generally, an ROE of 20% or more is considered highly attractive for any investment consideration. Although, it’s more of an industry-specific ratio as the constituents share similar risk profile. Read Cathay Dupont Award articles here...