The Industry Portal
Liquidity and treasury

Economic Value of Equity (EVE)

The present value of a bank's assets minus the present value of its liabilities, used to measure interest rate risk to value.

Economic Value of Equity discounts all the future cash flows of the banking book to today and takes assets minus liabilities. It shows how much the long run value of the bank would change if interest rates shifted.

It is one of the two standard IRRBB measures. Because it looks at the whole life of the balance sheet, it captures risk that a short earnings view can miss.

Related terms

Watch this explained

All videos

Learn this properly

A weekly note across Finance & Treasury, Innovation & Automation and Career Development. No spam, unsubscribe any time.