Similarly, a bank's profits are adversely affected if borrowers do not repay and the bank has to write off all or part of a loan. If prices of raw materials or parts for an industrial company change faster than its selling prices, profits are affected-either favorably or unfavorably depending on the direction and magnitude of the change. Likewise, if interest rates for deposits fall faster than rates charged on loans, a bank's profits improve. If deposit rates rise faster than a bank can raise the interest rates it charges its borrowers, its profits suffer. In place of sales for an industrial, I look at total income for financial stocks.
Total income includes interest income and other fees.
Pre-tax profits are similar to an industrial. Earnings per share are similar to an industrial. In addition I like to plot book value per share. Unless book value is growing, it will eventually limit the rate of growth of earnings because of the restraints imposed by regulatory authorities on capitalization ratios. Finally, I like to plot dividends per share.