Internal Capital Generation Rate - ICGR

AAA

DEFINITION of 'Internal Capital Generation Rate - ICGR'

A quantifiable mathematical rate that portrays how quickly a bank is able to generate equity capital. The Internal Capital Generation Rate (ICGR) is calculated by dividing the bank's retained earnings by the average balance of the combined equity of all stockholders for a given accounting period. The bank's retained earnings are found by subtracting dividends paid from net income.

INVESTOPEDIA EXPLAINS 'Internal Capital Generation Rate - ICGR'

The higher the ICGR, the more able a bank is to produce capital to loan. This rate improves with a bank's profitability and is also affected by the price of its stock. A quick way to calculate the ICGR is to take the plowback ratio and multiply by the ROE. For example, if the plowback ratio is 0.80 and ROE is 17%, the ICGR is 13.6%. Thus, the company grew their capital equity by 13.6%.

RELATED TERMS
  1. Return On Equity - ROE

    The amount of net income returned as a percentage of shareholders ...
  2. Capital

    1) Financial assets or the financial value of assets, such as ...
  3. Dividend

    1. A distribution of a portion of a company's earnings, decided ...
  4. Plowback Ratio

    A fundamental analysis ratio that measures the amount of earnings ...
  5. Interest Rate

    The amount charged, expressed as a percentage of principal, by ...
  6. Fundamental Analysis

    A method of evaluating a security that entails attempting to ...
Related Articles
  1. The Federal Reserve
    Economics

    The Federal Reserve

  2. How The U.S. Government Formulates Monetary ...
    Personal Finance

    How The U.S. Government Formulates Monetary ...

  3. Get To Know The Major Central Banks
    Forex Education

    Get To Know The Major Central Banks

  4. Explaining The World Through Macroeconomic ...
    Options & Futures

    Explaining The World Through Macroeconomic ...

comments powered by Disqus
Hot Definitions
  1. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  2. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  3. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  4. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  5. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
  6. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
Trading Center