National Australia Bank has won the race for best performer in the 2010/11 annual bank results, based simply on the improvement in its key indicators, with ANZ running second.Return on equity: PwC's banking partner, Mike Codling, said the banks did a good job of producing increased returns for shareholders in an environment where there was little opportunity to grow revenue.The average ROE for the majors was 16.7 per cent, compared with 15.1 per cent in 2009/10. Commonwealth Bank had the highest ROE, but NAB had the biggest increase. CBA's ROE rose from 18.7 per cent to 19.5 per cent, NAB's rose from 13.2 per cent to 15.2 per cent, ANZ's rose from 15.5 per cent to 16.2 per cent and Westpac's fell from 16.1 per cent to 16 per cent.Increase in earnings per share: on the basis of statutory earnings' figures, NAB's earnings per share rose 21.8 per cent, ANZ's 16.4 per cent, CBA's 11.8 per cent and Westpac's 8.8 per cent.On a cash earnings basis, NAB's earnings per share rose 16.5 per cent, CBA's 10.9 per cent, ANZ's 9.9 per cent and Westpac's 8.8 per cent.Net interest margin: KPMG's head of banking, Andrew Dickinson, said it would be hard for banks to maintain their margins in the current year. Low growth will lead to heightened competition for lending, resulting in pressure to keep pricing tight.Commonwealth Bank was the only one of the Big Four to increase its margins in the past financial year. This may be a timing issue: with a balance date of June 30, CBA was not affected by the tough trading conditions in the September quarter. Commonwealth's net interest margin rose from 2.13 per cent to 2.19 per cent. ANZ's margin fell from 2.47 per cent to 2.46 per cent, NAB's was steady at 2.24 per cent and Westpac's fell from 2.21 per cent to 2.19 per cent.Growth in assets: ANZ increased total assets by 11.8 per cent, NAB by 9.8 per cent, Westpac by 8.4 per cent and CBA by 3.3 per cent.Asset quality: all four banks enjoyed substantial reductions in their bad debt charges. Based on the ratio of impaired loans to loans and advances, Westpac had the best result. Its impaired loan ratio fell from 97 basis points to 93 basis points. However, ANZ had the best improvement. Its impaired loan ratio fell from 1.7 per cent to 1.1 per cent. CBA's ratio was steady at 1.04 per cent and NAB's ratio fell from 1.52 per cent to 1.45 per cent.Capital adequacy: with Basel III just around the corner, banks are putting a lot of work into building up their capital adequacy ratios. ANZ leads the way.ANZ's Tier-1 capital ratio rose from 10.08 to 10.9 percent, Commonwealth's rose from 9.15 per cent to 10.01 per cent, NAB's rose from 8.9 per cent to 9.7 per cent and Westpac's rose from 9.1 per cent to 9.6 per cent.Expense management: Ernst & Young's banking and capital markets leader, Paul Siviour, said that, with limited potential