asked the Minister for Finance if he will outline the criteria applied by the Central Bank in assessing banking profits.
Ceisteanna—Questions . Oral Answers . - Banking Profits Assessment .
7.
: The Central Bank have informed me that, in assessing the profits of the associated banks, they take account of:
1. general economic conditions, including the real rate of economic growth and the rate of inflation;
2. the rate of taxation;
3. prudential requirements, having regard to currently accepted supervisory standards;
4. a reasonable level of dividend.
The Central Bank consider that the profits of a bank should be such as to enable them to maintain an adequate ratio between total capital employed— that is, subscribed capital and reserves—and gross assets, after making provision for taxation, dividends and other contingencies. The associated banks are currently expected to ob-serve a ratio of not less than 6.5 per cent. In order to achieve this, a rate of pre-tax profit in the region of 23 to 26 per cent is regarded by the bank as appropriate in present circumstances.