Earnings measures
Regulatory Definition
Measures of changes in expected future profitability within a given time horizon resulting from interest rate movements.
EBA GL/2022/14
What This Actually Means
How much does your net interest income (or broader earnings) change if rates move? Unlike EVE which looks at lifetime value, earnings measures focus on a defined horizon — typically 1 to 3 years. This is what your CFO and board care about quarter to quarter.
Where It Matters
More intuitive than EVE for most stakeholders but can mask longer-term risks. A bank with a large fixed-rate mortgage book shows stable NII in year one (the mortgages keep paying) but the EVE tells you the present value of those fixed cashflows has dropped. Earnings stability today can coexist with economic value destruction.