{"id":283399,"date":"2024-07-21T08:00:48","date_gmt":"2024-07-21T08:00:48","guid":{"rendered":"https:\/\/www.techopedia.com\/?post_type=definition&#038;p=283399"},"modified":"2024-07-21T08:00:47","modified_gmt":"2024-07-21T08:00:47","slug":"return-on-tangible-equity-rote","status":"publish","type":"definition","link":"https:\/\/www.techopedia.com\/definition\/return-on-tangible-equity-rote","title":{"rendered":"Return on Tangible Equity (ROTE)"},"content":{"rendered":"<h2><span id=\"what_is_the_return_on_tangible_equity_rote\">What is the Return on Tangible Equity (ROTE)?<\/span><\/h2>\n<p>Return on tangible equity, which is also referred to as ROTE, is a financial measure that helps investors gauge a company&#8217;s profitability. It&#8217;s used to assess the efficiency by which a business has been able to generate profits by using its tangible assets, so it&#8217;s quite specific.<\/p>\n<p><img decoding=\"async\" src=\"https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/Return-on-Tangible-Equity-ROTE-2-300x173.jpg\" alt=\"Return on Tangible Equity (ROTE)\" width=\"1200\" height=\"690\" class=\"aligncenter wp-image-283466\" srcset=\"https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/Return-on-Tangible-Equity-ROTE-2-300x173.jpg 300w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/Return-on-Tangible-Equity-ROTE-2-1024x589.jpg 1024w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/Return-on-Tangible-Equity-ROTE-2-768x442.jpg 768w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/Return-on-Tangible-Equity-ROTE-2-1536x884.jpg 1536w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/Return-on-Tangible-Equity-ROTE-2-1200x690.jpg 1200w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/Return-on-Tangible-Equity-ROTE-2-1980x1139.jpg 1980w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/Return-on-Tangible-Equity-ROTE-2.jpg 2048w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" \/><\/p>\n<div class=\"su-note\"  style=\"border-color:#e5e54c;border-radius:\u201c3\u201dpx;-moz-border-radius:\u201c3\u201dpx;-webkit-border-radius:\u201c3\u201dpx;\"><div class=\"su-note-inner su-u-clearfix su-u-trim\" style=\"background-color:#FFFF66;border-color:#ffffff;color:#333333;border-radius:\u201c3\u201dpx;-moz-border-radius:\u201c3\u201dpx;-webkit-border-radius:\u201c3\u201dpx;\">\n<h2><span id=\"key_takeaways\">Key Takeaways<\/span><\/h2>\n<ul>\n<li>Return on tangible equity is a financial measure that helps to gauge a company&#8217;s profitability.<\/li>\n<li>ROTE is commonly used by analysts and investors in the banking industry.<\/li>\n<li>The ratio excludes intangible assets such as goodwill.<\/li>\n<li>It shows how successful a company is at investing shareholders&#8217; funds.<\/li>\n<li>The difference between ROTE and ROE is the exclusion of intangible elements.<\/li>\n<\/ul>\n<\/div><\/div>\n<h2><span id=\"what_rote_tells_you\">What ROTE Tells You<\/span><\/h2>\n<p>There are several ways to assess a company&#8217;s profitability, and each one will enable you to analyze it from a different perspective.<\/p>\n<p>Return on tangible equity, also known as <i>tangible common equity, <\/i>is one of those measures and illustrates how effective a business is at using just its tangible assets to generate profits.<\/p>\n<p><a href=\"https:\/\/www.sc.com\/us\/2023\/05\/09\/financial-reporting-and-performance-why-return-on-tangible-equity-should-be-a-banks-primary-financial-objective\/\" target=\"_blank\">According to Standard Chartered<\/a>, the ratio has been commonly used for many years by analysts and investors who follow the banking industry.<\/p>\n<p>&#8220;A return in excess of 10 percent is commonly expected from investors and the strong correlation between returns and share price is clear,&#8221; it stated. &#8220;Banks that have higher ROTE typically have higher share prices.&#8221;<\/p>\n<h2><span id=\"how_to_calculate_rote\">How to Calculate ROTE<\/span><\/h2>\n<p>A key question for investors is how to calculate ROTE. Well, there&#8217;s a fairly straightforward formula that is used to generate the answer. This ratio is calculated by dividing net earnings (post-tax profit) by the average tangible shareholders&#8217; equity.<\/p>\n<p>However, it&#8217;s probably worth examining each element in turn to better understand its role in the calculation.<\/p>\n<p>Let&#8217;s start with tangible assets. These are best defined as the physical items that a company owns. For example, its building, inventory, or manufacturing equipment.<\/p>\n<p>The ROTE calculation specifically excludes intangible assets. These include valuable assets to the business that aren&#8217;t in a physical form, such as the goodwill of customers.<\/p>\n<p>When it comes to shareholders&#8217; equity, this generally refers to the claim of the owners on the assets of a business after all debts have been settled, <a href=\"https:\/\/corporatefinanceinstitute.com\/resources\/accounting\/shareholders-equity\/\" target=\"_blank\">according to the Corporate Finance Institute.\u00a0<\/a><\/p>\n<h2><span id=\"return_on_tangible_equity_formula\">Return on Tangible Equity Formula<\/span><\/h2>\n<p>There is a <strong>formula<\/strong> that can be used to calculate ROTE:<\/p>\n<p><img decoding=\"async\" src=\"https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/ROTE-Formula-300x148.jpg\" alt=\"ROTE Formula\" width=\"1200\" height=\"592\" class=\"aligncenter wp-image-283435\" srcset=\"https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/ROTE-Formula-300x148.jpg 300w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/ROTE-Formula-1024x505.jpg 1024w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/ROTE-Formula-768x379.jpg 768w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/ROTE-Formula-130x63.jpg 130w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/ROTE-Formula-104x50.jpg 104w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/ROTE-Formula-83x40.jpg 83w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/ROTE-Formula-1536x758.jpg 1536w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/ROTE-Formula-1200x592.jpg 1200w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/ROTE-Formula-1980x976.jpg 1980w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/ROTE-Formula.jpg 2048w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" \/><\/p>\n<h2><span id=\"rote_vs_roe\">ROTE vs. ROE<\/span><\/h2>\n<p>It&#8217;s easy to get ROTE and ROE confused. In fact, this is quite understandable as they are both very similar, but there is a key difference between them.<\/p>\n<p>As we have already seen, ROTE looks at the company&#8217;s return on tangible equity and is regarded as a popular way to access a certain type of profitability.<\/p>\n<p>So, let&#8217;s now turn our attention to ROE. This stands for Return on Equity and measures financial performance by dividing net income by shareholders&#8217; equity.<\/p>\n<p>A sustainable and increasing ROE over time can mean a company is good at generating shareholder value because it knows how to invest its earnings, according to the <a href=\"https:\/\/corporatefinanceinstitute.com\/resources\/accounting\/what-is-return-on-equity-roe\/\" target=\"_blank\">Corporate Finance Institute<\/a>.<\/p>\n<p>&#8220;In contrast, a declining ROE can mean that management is making poor decisions on reinvesting capital in unproductive assets,&#8221; it stated.<\/p>\n<p><img decoding=\"async\" src=\"https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/ROE-Formula-300x176.jpg\" alt=\"ROE Formula\" width=\"1200\" height=\"703\" class=\"aligncenter wp-image-283430\" srcset=\"https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/ROE-Formula-300x176.jpg 300w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/ROE-Formula-1024x600.jpg 1024w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/ROE-Formula-768x450.jpg 768w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/ROE-Formula-1536x899.jpg 1536w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/ROE-Formula-1200x703.jpg 1200w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/ROE-Formula-1980x1159.jpg 1980w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/ROE-Formula.jpg 2048w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" \/><\/p>\n<p><strong>The key difference between these two ratios<\/strong> is that ROTE specifically excludes intangible assets, such as goodwill, from the calculator.<\/p>\n<p>There&#8217;s no right or wrong when it comes to this, it&#8217;s purely a way for the management team, analysts, and investors to assess the company&#8217;s performance using different measures.<\/p>\n<h2><span id=\"tangible_equity_vs_shareholders_equity\">Tangible Equity vs. Shareholders&#8217; Equity<\/span><\/h2>\n<p>These are the key attributes of both tangible equity and shareholders&#8217; equity, helping people understand the similarities and differences.<\/p>\n<div class=\"su-table su-table-responsive su-table-alternate\">\n<table>\n<tbody>\n<tr>\n<td><strong>Tangible equity\u00a0<\/strong><\/td>\n<td><strong>Shareholders&#8217; equity\u00a0<\/strong><\/td>\n<\/tr>\n<tr>\n<td>Land<\/td>\n<td>Common shares<\/td>\n<\/tr>\n<tr>\n<td>Vehicles<\/td>\n<td>Preferred shares<\/td>\n<\/tr>\n<tr>\n<td>Equipment<\/td>\n<td>Pain-in capital<\/td>\n<\/tr>\n<tr>\n<td>Inventory<\/td>\n<td>Retained earnings<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<h2><span id=\"rote_example\">ROTE Example<\/span><\/h2>\n<p>Here is a look at the return on tangible equity achieved by Goldman Sachs between 2010 and 2024, according to <a href=\"https:\/\/www.macrotrends.net\/stocks\/charts\/GS\/goldman-sachs\/return-on-tangible-equity#google_vignette\" target=\"_blank\">MacroTrends<\/a>.<\/p>\n<p>It produced the following table and graph.<\/p>\n<p><img decoding=\"async\" src=\"https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/Goldman-Sachs-ROTE-Historical-Data-278x300.jpg\" alt=\"Goldman Sachs ROTE Historical Data\" width=\"1200\" height=\"1293\" class=\"aligncenter wp-image-283441\" srcset=\"https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/Goldman-Sachs-ROTE-Historical-Data-278x300.jpg 278w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/Goldman-Sachs-ROTE-Historical-Data-950x1024.jpg 950w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/Goldman-Sachs-ROTE-Historical-Data-768x828.jpg 768w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/Goldman-Sachs-ROTE-Historical-Data-1425x1536.jpg 1425w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/Goldman-Sachs-ROTE-Historical-Data-1900x2048.jpg 1900w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/Goldman-Sachs-ROTE-Historical-Data-1200x1293.jpg 1200w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/Goldman-Sachs-ROTE-Historical-Data-1980x2134.jpg 1980w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/Goldman-Sachs-ROTE-Historical-Data.jpg 2048w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" \/><\/p>\n<h3>How ROTE is Used by Banks<\/h3>\n<p>The ROTE ratio is regularly used by those associated with the global banking industry and is used by analysts and investors for comparison purposes.<\/p>\n<p>Both Standard Chartered and Barclays have set higher goals for return on tangible equity (ROTE) by 2026 and announced plans for further cost savings, according to an <a href=\"https:\/\/www.spglobal.com\/marketintelligence\/en\/news-insights\/latest-news-headlines\/uk-banks-set-to-further-hike-dividends-on-strong-profits-cost-discipline-80747004\" target=\"_blank\">analysis by S&amp;P Global<\/a>.<\/p>\n<p>&#8220;Having reached double-digit ROTE for the first time in a decade last year, StanChart aims to achieve 12% in 2026,&#8221; it stated. &#8220;Barclays is targeting ROTE of more than 12% for that year, compared to 9% statutory ROTE booked in 2023.&#8221;<\/p>\n<p>Hargreaves Lansdown has also looked at the ROTE achieved by several prominent UK banks and provided a prediction for the current year.<\/p>\n<figure id=\"attachment_283451\" aria-describedby=\"caption-attachment-283451\" style=\"width: 1200px\" class=\"wp-caption aligncenter\"><img decoding=\"async\" src=\"https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/Return-on-tangible-equity-\u2013-company-fourth-quarter-financial-statements-accessed-06.03.24-300x203.jpg\" alt=\"Return on tangible equity \u2013 company fourth quarter financial statements, accessed 06.03.24\" width=\"1200\" height=\"813\" class=\"wp-image-283451\" srcset=\"https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/Return-on-tangible-equity-\u2013-company-fourth-quarter-financial-statements-accessed-06.03.24-300x203.jpg 300w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/Return-on-tangible-equity-\u2013-company-fourth-quarter-financial-statements-accessed-06.03.24-1024x694.jpg 1024w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/Return-on-tangible-equity-\u2013-company-fourth-quarter-financial-statements-accessed-06.03.24-768x520.jpg 768w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/Return-on-tangible-equity-\u2013-company-fourth-quarter-financial-statements-accessed-06.03.24-1200x813.jpg 1200w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/Return-on-tangible-equity-\u2013-company-fourth-quarter-financial-statements-accessed-06.03.24.jpg 1228w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" \/><figcaption id=\"caption-attachment-283451\" class=\"wp-caption-text\">Source: <a href=\"https:\/\/www.hl.co.uk\/news\/the-uks-biggest-bank-stocks-time-to-take-a-look\" target=\"_blank\">Hargreaves Lansdown<\/a><\/figcaption><\/figure>\n<p>This ratio is seen as very important to banks. For example, Deutsche Bank previously <a href=\"https:\/\/www.db.com\/news\/detail\/20220310-deutsche-bank-raises-its-return-on-tangible-equity-target-to-above-10-percent?language_id=1\" target=\"_blank\">announced<\/a> a plan to increase its return on tangible equity target to above 10% by 2025.<\/p>\n<p>In a media release, it also outlined its intention to &#8220;organically generate&#8221; significant additional tangible equity.<\/p>\n<p>&#8220;This is expected to be achieved through a combination of revenue growth, further efficiencies and self-funded investments,&#8221; it stated.<\/p>\n<h2><span id=\"rote_pros_and_cons\">ROTE Pros and Cons<\/span><\/h2>\n<p>So, what are the various pros and cons of using ROTE?<\/p>\n<p>Well, one of the main benefits of this ratio is enabling analysts to see how effectively a company uses shareholders&#8217; funds.<\/p>\n<p>As it excludes intangible elements, which by their very nature can&#8217;t be quantified accurately, it shows how they&#8217;re operating with the equity capital at their disposal.<\/p>\n<p>There aren&#8217;t any real downsides to using ROTE, as it&#8217;s purely a tool for measuring and analyzing a company&#8217;s profitability.<\/p>\n<h2><span id=\"the_bottom_line\">The Bottom Line<\/span><\/h2>\n<p>It&#8217;s always important to measure a company&#8217;s profitability, and that is at the heart of the return on tangible equity meaning. However, as with every financial measure used to analyze a business, ROTE should not be used in isolation. Therefore, the return on tangible equity needs to be seen as one of many tools that can be used for analysis purposes.<\/p>\n<h2><span id=\"faqs\">FAQs<\/span><\/h2>\n<div class=\"man_faq_sec\" itemscope itemtype=\"https:\/\/schema.org\/FAQPage\"><\/time><section class=\"ms_faq ms_card \" ><div itemscope itemprop=\"mainEntity\" itemtype=\"https:\/\/schema.org\/Question\"><div class=\"accordionButton\"><h3 itemprop=\"name\">What is the return on tangible equity in simple terms?<\/h3> <\/div>\n<div class=\"accordionContent\" itemscope itemprop=\"acceptedAnswer\" itemtype=\"https:\/\/schema.org\/Answer\" style=\"display:none;\"><p itemprop=\"text\">The return on tangible equity definition is a financial measure that helps to gauge a company\u2019s profitability.<\/p>\r\n                <\/div><\/div><\/section>\n<section class=\"ms_faq ms_card \" ><div itemscope itemprop=\"mainEntity\" itemtype=\"https:\/\/schema.org\/Question\"><div class=\"accordionButton\"><h3 itemprop=\"name\">How is tangible equity calculated?<\/h3> <\/div>\n<div class=\"accordionContent\" itemscope itemprop=\"acceptedAnswer\" itemtype=\"https:\/\/schema.org\/Answer\" style=\"display:none;\"><p itemprop=\"text\">The tangible common equity ratio is the correlation of a company&#8217;s tangible equity to its tangible assets. This means: (common shareholders&#8217; equity &#8211; intangible assets) divided by (total assets &#8211; intangible assets), <a href=\"https:\/\/www.morningstar.com\/investing-definitions\/tangible-common-equity-ratio\" target=\"_blank\">according to Morningstar<\/a>.<\/p>\r\n                <\/div><\/div><\/section>\n<section class=\"ms_faq ms_card \" ><div itemscope itemprop=\"mainEntity\" itemtype=\"https:\/\/schema.org\/Question\"><div class=\"accordionButton\"><h3 itemprop=\"name\">How do you calculate return on tangible equity?<\/h3> <\/div>\n<div class=\"accordionContent\" itemscope itemprop=\"acceptedAnswer\" itemtype=\"https:\/\/schema.org\/Answer\" style=\"display:none;\"><p itemprop=\"text\">The formula for working out the return on tangible equity is dividing a company\u2019s net income by the average shareholders\u2019 equity (minus intangible assets).<\/p>\r\n                <\/div><\/div><\/section>\n<section class=\"ms_faq ms_card \" ><div itemscope itemprop=\"mainEntity\" itemtype=\"https:\/\/schema.org\/Question\"><div class=\"accordionButton\"><h3 itemprop=\"name\">What does ROTE tell you?<\/h3> <\/div>\n<div class=\"accordionContent\" itemscope itemprop=\"acceptedAnswer\" itemtype=\"https:\/\/schema.org\/Answer\" style=\"display:none;\"><p itemprop=\"text\">The measure illustrates how effective a business is at using just its tangible assets to generate profits.<\/p>\r\n                <\/div><\/div><\/section>\n<section class=\"ms_faq ms_card \" ><div itemscope itemprop=\"mainEntity\" itemtype=\"https:\/\/schema.org\/Question\"><div class=\"accordionButton\"><h3 itemprop=\"name\">Why use ROTE vs. ROE?<\/h3> <\/div>\n<div class=\"accordionContent\" itemscope itemprop=\"acceptedAnswer\" itemtype=\"https:\/\/schema.org\/Answer\" style=\"display:none;\"><p itemprop=\"text\">Investors may decide to use ROTE if they want to assess the company\u2019s performance without taking into account the many hard-to-quantify (intangible) elements.<\/p>\r\n                <\/div><\/div><\/section>\n<div class=\"reference-content\">\n<div class=\"reference-heading reference-content-collapsible-heading\">\n<h2><span id=\"references\">References<\/span><\/h2>\n<\/div>\n<div class=\"reference-content-body\">\n<ol>\n<li><a href=\"https:\/\/www.sc.com\/us\/2023\/05\/09\/financial-reporting-and-performance-why-return-on-tangible-equity-should-be-a-banks-primary-financial-objective\/\" target=\"_blank\">Financial reporting and performance: why return on tangible equity should be a bank\u2019s primary financial objective | Standard Chartered USA<\/a> (Sc)<\/li>\n<li><a href=\"https:\/\/corporatefinanceinstitute.com\/resources\/accounting\/shareholders-equity\/\" target=\"_blank\">Shareholders\u2019 Equity &#8211; Definition, Formula, Calculate<\/a> (Corporatefinanceinstitute)<\/li>\n<li><a href=\"https:\/\/corporatefinanceinstitute.com\/resources\/accounting\/what-is-return-on-equity-roe\/\" target=\"_blank\">Return on Equity (ROE) &#8211; Formula, Examples and Guide to ROE<\/a> (Corporatefinanceinstitute)<\/li>\n<li><a href=\"https:\/\/www.macrotrends.net\/stocks\/charts\/GS\/goldman-sachs\/return-on-tangible-equity#google_vignette\" target=\"_blank\">Goldman Sachs Return on Tangible Equity 2010-2024 | GS | MacroTrends<\/a> (Macrotrends)<\/li>\n<li><a href=\"https:\/\/www.spglobal.com\/marketintelligence\/en\/news-insights\/latest-news-headlines\/uk-banks-set-to-further-hike-dividends-on-strong-profits-cost-discipline-80747004\" target=\"_blank\"><span>UK banks set to further hike dividends on strong profits, cost discipline<\/span><\/a> (Spglobal)<\/li>\n<li><a href=\"https:\/\/www.hl.co.uk\/news\/the-uks-biggest-bank-stocks-time-to-take-a-look\" target=\"_blank\">The UK\u2019s biggest bank stocks \u2013 time to take a look? | Hargreaves Lansdown<\/a> (Hl.co)<\/li>\n<li><a href=\"https:\/\/www.db.com\/news\/detail\/20220310-deutsche-bank-raises-its-return-on-tangible-equity-target-to-above-10-percent?language_id=1\" target=\"_blank\"><span>Deutsche Bank raises its return on tangible equity target to above 10 percent<\/span><\/a> (Db)<\/li>\n<li><a href=\"https:\/\/www.morningstar.com\/investing-definitions\/tangible-common-equity-ratio\" target=\"_blank\">What is the tangible common equity ratio? | Investing Definitions<\/a> (Morningstar)<\/li>\n<\/ol>\n<\/div>\n<\/div>\n<\/div>","protected":false},"excerpt":{"rendered":"<p>What is the Return on Tangible Equity (ROTE)? Return on tangible equity, which is also referred to as ROTE, is a financial measure that helps investors gauge a company&#8217;s profitability. It&#8217;s used to assess the efficiency by which a business has been able to generate profits by using its tangible assets, so it&#8217;s quite specific. [&hellip;]<\/p>\n","protected":false},"author":286864,"featured_media":283465,"comment_status":"open","ping_status":"closed","template":"","format":"standard","meta":{"_acf_changed":false,"_lmt_disableupdate":"","_lmt_disable":"","om_disable_all_campaigns":false,"footnotes":""},"definitioncat":[2686],"class_list":["post-283399","definition","type-definition","status-publish","format-standard","has-post-thumbnail","hentry","definitioncat-economics"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v24.2 (Yoast SEO v24.5) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What is the Return on Tangible Equity? ROTE Definition with Techopedia<\/title>\n<meta name=\"description\" content=\"The return on tangible equity is a financial measure that helps investors gauge a company\u2019s profitability. Techopedia explains the full ROTE meaning here.\" \/>\n<meta name=\"robots\" content=\"noindex, follow\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Return on Tangible Equity (ROTE)\" \/>\n<meta property=\"og:description\" content=\"The return on tangible equity is a financial measure that helps investors gauge a company\u2019s profitability. Techopedia explains the full ROTE meaning here.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.techopedia.com\/definition\/return-on-tangible-equity-rote\" \/>\n<meta property=\"og:site_name\" content=\"Techopedia\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/techopedia\/\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/Return-on-Tangible-Equity-ROTE-1.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"2480\" \/>\n\t<meta property=\"og:image:height\" content=\"1280\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:site\" content=\"@techopedia\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"7 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.techopedia.com\/definition\/return-on-tangible-equity-rote#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.techopedia.com\/definition\/return-on-tangible-equity-rote\"},\"author\":{\"name\":\"Rob Griffin\",\"@id\":\"https:\/\/www.techopedia.com\/#\/schema\/person\/de74e2b4af669f7f18bbf502cde46bf2\"},\"headline\":\"Return on Tangible Equity (ROTE)\",\"datePublished\":\"2024-07-21T08:00:48+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.techopedia.com\/definition\/return-on-tangible-equity-rote\"},\"wordCount\":1306,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/www.techopedia.com\/#organization\"},\"image\":{\"@id\":\"https:\/\/www.techopedia.com\/definition\/return-on-tangible-equity-rote#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/Return-on-Tangible-Equity-ROTE-1.jpg\",\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.techopedia.com\/definition\/return-on-tangible-equity-rote#respond\"]}],\"articleSection\":\"\"},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.techopedia.com\/definition\/return-on-tangible-equity-rote\",\"url\":\"https:\/\/www.techopedia.com\/definition\/return-on-tangible-equity-rote\",\"name\":\"What is the Return on Tangible Equity? ROTE Definition with Techopedia\",\"isPartOf\":{\"@id\":\"https:\/\/www.techopedia.com\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.techopedia.com\/definition\/return-on-tangible-equity-rote#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.techopedia.com\/definition\/return-on-tangible-equity-rote#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/Return-on-Tangible-Equity-ROTE-1.jpg\",\"datePublished\":\"2024-07-21T08:00:48+00:00\",\"description\":\"The return on tangible equity is a financial measure that helps investors gauge a company\u2019s profitability. Techopedia explains the full ROTE meaning here.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.techopedia.com\/definition\/return-on-tangible-equity-rote#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.techopedia.com\/definition\/return-on-tangible-equity-rote\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.techopedia.com\/definition\/return-on-tangible-equity-rote#primaryimage\",\"url\":\"https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/Return-on-Tangible-Equity-ROTE-1.jpg\",\"contentUrl\":\"https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/Return-on-Tangible-Equity-ROTE-1.jpg\",\"width\":2480,\"height\":1280,\"caption\":\"Return on Tangible Equity (ROTE)\"},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.techopedia.com\/definition\/return-on-tangible-equity-rote#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.techopedia.com\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Investing\",\"item\":\"https:\/\/www.techopedia.com\/investing\"},{\"@type\":\"ListItem\",\"position\":3,\"name\":\"Economics\",\"item\":\"https:\/\/www.techopedia.com\/investing\/economics\"},{\"@type\":\"ListItem\",\"position\":4,\"name\":\"Term\",\"item\":\"https:\/\/www.techopedia.com\/definition\"},{\"@type\":\"ListItem\",\"position\":5,\"name\":\"Return on Tangible Equity (ROTE)\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.techopedia.com\/#website\",\"url\":\"https:\/\/www.techopedia.com\/\",\"name\":\"Techopedia\",\"description\":\"\",\"publisher\":{\"@id\":\"https:\/\/www.techopedia.com\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.techopedia.com\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/www.techopedia.com\/#organization\",\"name\":\"Techopedia\",\"url\":\"https:\/\/www.techopedia.com\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.techopedia.com\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/www.techopedia.com\/wp-content\/uploads\/2025\/02\/techopedia-light-logo.svg\",\"contentUrl\":\"https:\/\/www.techopedia.com\/wp-content\/uploads\/2025\/02\/techopedia-light-logo.svg\",\"caption\":\"Techopedia\"},\"image\":{\"@id\":\"https:\/\/www.techopedia.com\/#\/schema\/logo\/image\/\"},\"sameAs\":[\"https:\/\/www.facebook.com\/techopedia\/\",\"https:\/\/x.com\/techopedia\",\"https:\/\/www.linkedin.com\/company\/techopedia\/\",\"https:\/\/www.youtube.com\/c\/Techopedia\"],\"publishingPrinciples\":\"https:\/\/www.techopedia.com\/about\/editorial-policy\",\"ownershipFundingInfo\":\"https:\/\/www.techopedia.com\/about\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.techopedia.com\/#\/schema\/person\/de74e2b4af669f7f18bbf502cde46bf2\",\"name\":\"Rob Griffin\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.techopedia.com\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/01\/avatar_user_286864_1705677913-300x300.jpeg\",\"contentUrl\":\"https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/01\/avatar_user_286864_1705677913-300x300.jpeg\",\"caption\":\"Rob Griffin\"},\"description\":\"Rob is a seasoned journalist with over three decades of experience spanning across business and finance journalism. Before embarking on a freelance career in 2002, he contributed his expertise to the business desks of notable publications such as The Guardian, Yorkshire Post, Sunday Business (now Business Post), and Sunday Express. Throughout his freelance journey, Rob has been a regular contributor to a wide range of national newspapers, consumer magazines, trade publications, and websites. His work has appeared in titles such as The Independent, Citywire, Daily Express, FT Adviser, and Sunday Telegraph, covering an array of subjects from market trends to financial advice. Today, he is covering the latest financial market developments and trends on Techopedia.\",\"sameAs\":[\"https:\/\/www.senlac.net\/\",\"https:\/\/www.linkedin.com\/in\/rwgriffin\/\"],\"knowsAbout\":[\"Tech Finance Journalist\"],\"url\":\"https:\/\/www.techopedia.com\/contributors\/robgriffin\"}]}<\/script>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"What is the Return on Tangible Equity? ROTE Definition with Techopedia","description":"The return on tangible equity is a financial measure that helps investors gauge a company\u2019s profitability. Techopedia explains the full ROTE meaning here.","robots":{"index":"noindex","follow":"follow"},"og_locale":"en_US","og_type":"article","og_title":"Return on Tangible Equity (ROTE)","og_description":"The return on tangible equity is a financial measure that helps investors gauge a company\u2019s profitability. Techopedia explains the full ROTE meaning here.","og_url":"https:\/\/www.techopedia.com\/definition\/return-on-tangible-equity-rote","og_site_name":"Techopedia","article_publisher":"https:\/\/www.facebook.com\/techopedia\/","og_image":[{"width":2480,"height":1280,"url":"https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/Return-on-Tangible-Equity-ROTE-1.jpg","type":"image\/jpeg"}],"twitter_card":"summary_large_image","twitter_site":"@techopedia","twitter_misc":{"Est. reading time":"7 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.techopedia.com\/definition\/return-on-tangible-equity-rote#article","isPartOf":{"@id":"https:\/\/www.techopedia.com\/definition\/return-on-tangible-equity-rote"},"author":{"name":"Rob Griffin","@id":"https:\/\/www.techopedia.com\/#\/schema\/person\/de74e2b4af669f7f18bbf502cde46bf2"},"headline":"Return on Tangible Equity (ROTE)","datePublished":"2024-07-21T08:00:48+00:00","mainEntityOfPage":{"@id":"https:\/\/www.techopedia.com\/definition\/return-on-tangible-equity-rote"},"wordCount":1306,"commentCount":0,"publisher":{"@id":"https:\/\/www.techopedia.com\/#organization"},"image":{"@id":"https:\/\/www.techopedia.com\/definition\/return-on-tangible-equity-rote#primaryimage"},"thumbnailUrl":"https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/Return-on-Tangible-Equity-ROTE-1.jpg","inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/www.techopedia.com\/definition\/return-on-tangible-equity-rote#respond"]}],"articleSection":""},{"@type":"WebPage","@id":"https:\/\/www.techopedia.com\/definition\/return-on-tangible-equity-rote","url":"https:\/\/www.techopedia.com\/definition\/return-on-tangible-equity-rote","name":"What is the Return on Tangible Equity? ROTE Definition with Techopedia","isPartOf":{"@id":"https:\/\/www.techopedia.com\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.techopedia.com\/definition\/return-on-tangible-equity-rote#primaryimage"},"image":{"@id":"https:\/\/www.techopedia.com\/definition\/return-on-tangible-equity-rote#primaryimage"},"thumbnailUrl":"https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/Return-on-Tangible-Equity-ROTE-1.jpg","datePublished":"2024-07-21T08:00:48+00:00","description":"The return on tangible equity is a financial measure that helps investors gauge a company\u2019s profitability. Techopedia explains the full ROTE meaning here.","breadcrumb":{"@id":"https:\/\/www.techopedia.com\/definition\/return-on-tangible-equity-rote#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.techopedia.com\/definition\/return-on-tangible-equity-rote"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.techopedia.com\/definition\/return-on-tangible-equity-rote#primaryimage","url":"https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/Return-on-Tangible-Equity-ROTE-1.jpg","contentUrl":"https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/07\/Return-on-Tangible-Equity-ROTE-1.jpg","width":2480,"height":1280,"caption":"Return on Tangible Equity (ROTE)"},{"@type":"BreadcrumbList","@id":"https:\/\/www.techopedia.com\/definition\/return-on-tangible-equity-rote#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.techopedia.com\/"},{"@type":"ListItem","position":2,"name":"Investing","item":"https:\/\/www.techopedia.com\/investing"},{"@type":"ListItem","position":3,"name":"Economics","item":"https:\/\/www.techopedia.com\/investing\/economics"},{"@type":"ListItem","position":4,"name":"Term","item":"https:\/\/www.techopedia.com\/definition"},{"@type":"ListItem","position":5,"name":"Return on Tangible Equity (ROTE)"}]},{"@type":"WebSite","@id":"https:\/\/www.techopedia.com\/#website","url":"https:\/\/www.techopedia.com\/","name":"Techopedia","description":"","publisher":{"@id":"https:\/\/www.techopedia.com\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.techopedia.com\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/www.techopedia.com\/#organization","name":"Techopedia","url":"https:\/\/www.techopedia.com\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.techopedia.com\/#\/schema\/logo\/image\/","url":"https:\/\/www.techopedia.com\/wp-content\/uploads\/2025\/02\/techopedia-light-logo.svg","contentUrl":"https:\/\/www.techopedia.com\/wp-content\/uploads\/2025\/02\/techopedia-light-logo.svg","caption":"Techopedia"},"image":{"@id":"https:\/\/www.techopedia.com\/#\/schema\/logo\/image\/"},"sameAs":["https:\/\/www.facebook.com\/techopedia\/","https:\/\/x.com\/techopedia","https:\/\/www.linkedin.com\/company\/techopedia\/","https:\/\/www.youtube.com\/c\/Techopedia"],"publishingPrinciples":"https:\/\/www.techopedia.com\/about\/editorial-policy","ownershipFundingInfo":"https:\/\/www.techopedia.com\/about"},{"@type":"Person","@id":"https:\/\/www.techopedia.com\/#\/schema\/person\/de74e2b4af669f7f18bbf502cde46bf2","name":"Rob Griffin","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.techopedia.com\/#\/schema\/person\/image\/","url":"https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/01\/avatar_user_286864_1705677913-300x300.jpeg","contentUrl":"https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/01\/avatar_user_286864_1705677913-300x300.jpeg","caption":"Rob Griffin"},"description":"Rob is a seasoned journalist with over three decades of experience spanning across business and finance journalism. Before embarking on a freelance career in 2002, he contributed his expertise to the business desks of notable publications such as The Guardian, Yorkshire Post, Sunday Business (now Business Post), and Sunday Express. Throughout his freelance journey, Rob has been a regular contributor to a wide range of national newspapers, consumer magazines, trade publications, and websites. His work has appeared in titles such as The Independent, Citywire, Daily Express, FT Adviser, and Sunday Telegraph, covering an array of subjects from market trends to financial advice. Today, he is covering the latest financial market developments and trends on Techopedia.","sameAs":["https:\/\/www.senlac.net\/","https:\/\/www.linkedin.com\/in\/rwgriffin\/"],"knowsAbout":["Tech Finance Journalist"],"url":"https:\/\/www.techopedia.com\/contributors\/robgriffin"}]}},"_links":{"self":[{"href":"https:\/\/www.techopedia.com\/wp-json\/wp\/v2\/definition\/283399","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.techopedia.com\/wp-json\/wp\/v2\/definition"}],"about":[{"href":"https:\/\/www.techopedia.com\/wp-json\/wp\/v2\/types\/definition"}],"author":[{"embeddable":true,"href":"https:\/\/www.techopedia.com\/wp-json\/wp\/v2\/users\/286864"}],"replies":[{"embeddable":true,"href":"https:\/\/www.techopedia.com\/wp-json\/wp\/v2\/comments?post=283399"}],"version-history":[{"count":0,"href":"https:\/\/www.techopedia.com\/wp-json\/wp\/v2\/definition\/283399\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.techopedia.com\/wp-json\/wp\/v2\/media\/283465"}],"wp:attachment":[{"href":"https:\/\/www.techopedia.com\/wp-json\/wp\/v2\/media?parent=283399"}],"wp:term":[{"taxonomy":"definitioncat","embeddable":true,"href":"https:\/\/www.techopedia.com\/wp-json\/wp\/v2\/definitioncat?post=283399"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}