Calculate the Following Ratios |
Net Interest Margin |
Profit Margin |
ROE |
ROA |
Spread Ratio |
Asset Utilization Ratio |
Equity Multiplier |
Provision for loan loss ratio |
1. Net Interest Margin | |||||
Formula | (Net Interest Income - Net interest cost)/ Interest earning assets | ||||
Net Interest Income | |||||
Interest on fees and loans | 9,000 | ||||
Interest on Investment and Securities | 4,000 | ||||
Interest on reverse repos | 6,000 | ||||
Interest on deposit in other banks | 1,000 | ||||
Net Interest Income | 20,000 | ||||
Net Interest Cost | |||||
Interest on deposits | 9,000 | ||||
Interest on long term debt | 2,000 | ||||
11,000 | |||||
Interest Earning Assets | |||||
Cash and due from banks | 9,000 | ||||
Investment securities | 23,000 | ||||
Reverse Repos | 42,000 | ||||
Loans | 90,000 | ||||
Interest Earning Assets | 1,64,000 | ||||
So NIM is | (20000-11000)/164000 | ||||
i.e. | 5.49% | ||||
2. Profit margin | |||||
Formula | Net Profit/ Revenue | ||||
Here | |||||
Net Profit is $5000 | |||||
Revenue is $20000 | |||||
therefore Profit margin is | |||||
5000/20000 | |||||
i.e. 25% | |||||
3. ROE | |||||
Formula | Net Profit/ Shareholder's equity | ||||
Here Shareholder's equity | |||||
Common Stock | 12,000 | ||||
Paid in capital | 4,000 | ||||
Retained earnings | 12,000 | ||||
Shareholder's equity | 28,000 | ||||
therefore ROE is | |||||
5000/28000 | |||||
i.e. 17.86% | |||||
4. ROA | |||||
Formula | Net Profit/ Total Assets | ||||
therefore ROA is | |||||
5000/183000 | |||||
i.e. 2.73% | |||||
5. Spread Ratio | |||||
Formula | Interest Spread ratio= | ||||
(Interest Income/Interest earning assets)-(interest expense/Avg. int bearing liabilities) | |||||
Interest Income | 20,000 | ||||
Interest Earning Assets | 1,64,000 | ||||
(As per NIM Formula) | |||||
Interest Expense | 11,000 | ||||
Interest bearing liabilities | |||||
Demand deposit | 19,000 | ||||
Accounts | 89,000 | ||||
Retail CDs | 28,000 | ||||
Long term debt | 19,000 | ||||
1,55,000 | |||||
i.e. = (20000/164000)-(11000/155000) | |||||
i.e. 5.10% | |||||
6. Asset Utilization Ratio | |||||
Formula | Revenue/Total Assets | ||||
i.e. 20000/183000 | |||||
10.93% | |||||
7. Equity Multiplier | |||||
Formula | Total Assets/ Shareholder's Equity | ||||
i.e. 183000/28000 | |||||
i.e. 6.54 | |||||
8. Provision for loan loss ratio | |||||
Formula | (Profit before tax + provision for loan losses)/ Loan book | ||||
i.e. (8000+2000)/90000 | |||||
i.e. 11.11% |
Calculate the Following Ratios Net Interest Margin Profit Margin ROE ROA Spread Ratio Asset Utilization Ratio...
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