EFTA Document EFTA01459753

8 February 2016 US Equity Insights It thtlicult for inflation to be sulatneel vvithoot oredit expan ion A bank's deposit base and loan book should grow with inflation because there cannot be sustained inflation without expanding money supply. Rising money supply requires credit creation. If a bank were to pay out all of its earnings as dividends, such that its equity base stays constant, its ROE will rise year after year if its deposit base and loan book were to grow year after year owin