The paper presents one of the classic methods to analyse financial performance - the Du Pont analysis, adapted for banks and introduced to the sector in 1972 by David Cole. The presentation is illustrated with the case of a major Polish bank.

The analysis of a bank's financial performance is central in evaluating the institutions' general financial position. Such evaluation is conducted by various groups such as potential investors, the bank's management, its owners, banking supervision bodies etc.

There exist several methods to measure a bank's financial performance - the paper discusses Cole's model of return on equity index decomposition. It involves an analysis of several indices, starting from the most complex ones, which are gradually broken into increasingly simple indicators. The unquestionable advantage of the method is its universal character - it can be applied to companies representing any industry. It is also a simple and helpful tool in making practical financial decisions.

The description is illustrated with an analysis of a big Polish bank. The characteristics of the balance sheet and profit and loss account seem representative of the Polish banking sector in general, particularly with respect to large banks. In the subsequent stages of index decomposition, trends in the bank's financial performance are captured, and the reasons for those trends outlined. The decline in the ROE and ROA indices is caused by rising costs, including the cost of increased provisions in respect of non-performing loans and interest cost.