MEASURING PERFORMANCE OF BANKS

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MEASURING PERFORMANCE OF BANKS Powered By Docstoc
					      RATIO ANALYSIS OF BANKS
REVIEW FIVE TYPES OF RATIOS-
 1. RETURN OR PROFITABILITY
 2. OPERATING EFFICIENCY
 3. TAX MANAGEMENT
 4. LIQUIDITY
 5. CAPITAL ADEQUACY
MEASURING RETURNS:
RETURN ON ASSETS (ROA) =
NET PROFIT  TOTAL ASSETS


RETURN ON EQUITY (ROE) =
NET PROFIT  COMMON EQUITY


OR ROE =

NET PROF    X G.O.I. X TOT ASSETS
GROSS OP.INC TOT ASSETS COM.EQ’TY
NET PROFIT MARGIN =
NET PROFIT  GROSS OPER INCOME

NET INTEREST MARGIN =
TOT INTEREST INCOME - INT EXPENSE
TOTAL ASSETS OR EARNINGS ASSETS




INT INC. ON LOANS/AVG LOAN PORTFOLIO




INT INC ON SECUR./AVG SECUR PORTFOLIO
MEASURING OPERATING EFFICIENCY:
TOTAL OPER EXP  GROSS OPER. INC.



GROSS OPERATING INCOME/ ASSETS



TOT NON-INTEREST INCOMETOT ASSETS



TOT NON-INT INCOVERHEAD EXPENSES



AVERAGE YIELD ON ASSETS =
TOTAL INTEREST INCOMETOTAL ASSETS
INTEREST EXPENSE/GROSS OPER.INC.



TOTAL INTEREST EXPTOTAL ASSETS


TAX MANAGEMENT MEASURES:
TAX EXEMPT POSITION=
INVMT IN TAX EXEMPT SEC  TOT ASSETS


LOAN LOSS PROV  GROSS OPER INC


MEASURING LIQUIDITY:
CASH & DUE FROM BANKSTOT ASSETS


TOT DEMAND DEPOSITS  TOTAL ASSETS
TIME DEPOSITSTOTAL ASSETS

LOANS AND MORTGAGESTOTAL ASSETS



MEASURING CAPITAL ADEQUACY:

CAPITAL RATIO =
EQUITY CAPITAL  TOTAL ASSETS



LEVERAGE RATIO =
TOTAL ASSETS  EQUITY CAPITAL



LOAN LOSS RES  TOT LOANS & MORT.

				
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posted:10/4/2010
language:English
pages:5