National Australia Bank will target a return on equity of 18 per cent to 20 per cent, said Mark Joiner. This is consistent with long-term returns for the top 20 companies in Australia, said the bank's executive director of finance, speaking at the ACFS-Finsia conference, held in Melbourne on Friday.Joiner said all banks would "seek to work their way back to 18 per cent to 20 per cent."He  said with an ROE of 18 per cent big banks could maintain their present dividend payout ratio of 65 per cent and still retain sufficient capital to support balance sheet growth of between eight per cent and ten per cent.Foreign banks were one competitive check on this profit potential, Joiner said.A second impediment to meeting this target may be entrenched thinking at the bank.Joiner told an anecdote about attending a credit committee meeting where line managers in the business bank claimed a planned loan would deliver a return on equity of 25 per cent.Asked by Joiner about the lending margin the bankers' planned to offer the borrower, he was told this was 125 basis points.Joiner said he pointed out that the bank borrowed funds the night before in London at 142 basis points and that, on his reckoning, the loan was a loss-maker.