Question

I have to comment on the profitability of Barclays bank. I was wondering what the best measures of profitability were (any formulas)? and where in the financial statements i could find figures for these? e.g. balance sheet/ income statement.

Many Thanks.

Answer 1

Formulae used:

Ratios to assess bank's profitability :

Return on assets(ROA)= Net income/Av. Total assets

Av. Total assets= (Beginning total assets+Ending total assets)/2

Return on equity (ROE)= Net income/Av. Total equity

Av. Total equity= (Beginning total equity+Ending total equity)/2

Net Interest Margin=Net interest income/Av. Total Assets

	Website address: https://last10k.com/sec-filings/jo
	(Fig. in mlns.)	Fiscal yr. ended Dec 31,
		2018	2017	2016
Pg. 105	1.Profit after tax	835	-1154	3729
Pg.107	2. Total assets	877700	1129343
	3.Average total assets
	(1129343+877700)/2=	1003521.5
	4. ROA= (1/3)	835/1003522=
		0.08%
Pg.107	5.Total equity	47711	65734
	6.Average total equity
	(65734+47711)/2=	56723
	7.ROE=(1/6)	835/56723=
		1.47%
Pg. 105	8.Net interest Income	3130	3876	4776
	9.Net Interest margin=8/3)	3130/1003522=
		0.31%
	## Assets & equity are averaged

(Fig. in mlns.)	Fiscal yr. ended Dec 31,
	2018	2017	2016
1.Profit after tax	835	-1154	3729
2. Total assets	877700	1129343
3. ROA= (1/2)	835/877700=
	0.10%
5.Total equity	47711	65734
6.ROE=(1/5)	835/47711=
	1.75%
7.Net interest Income	3130	3876	4776
8.Net Interest margin=(7/2)	3130/877700=
	0.36%