26.08.2019
 Evaluating Lender Performance Dissertation

FN6012 –COMMERCIAL BANK MANAGEMENT

NATSIOU ALNISA

ASSIGNMENT#2

PROBLEM several. 1 --- CHAPTER three or more

3. 1(a)

FINANCIAL PERCENTAGES FOR Z-BANK'S

PEER GROUP |В |В | | |FINANCIAL RATIOS FOR Z-BANK * | | | | | | | | | | | | | | |Financial Ratios |В |20XX-1 |20XX | |Financial Ratios |В |20XX-1 |20XX | |Profit Ratios | | | | |Profit Ratios | | | | |Return on Collateral (ROE) | |20, 00% |18, 00% | |Return on Fairness (ROE) | |53, 66% |14, 63% | |Return on Possessions (ROA) | |1, 00% |0, 90% | |Return on Assets (ROA) | |1, 85% |0, 56% | |Profit Margin | |7, 00% |6, 50 percent | |Profit Margin | |13, 02% |4, 20% | |Net Operating Perimeter | |2, 40% |2, 30% | |Net Operating Margin | |29, 00% |9, many of these | |Net Interest Perimeter | |5, 20% |5, 00% | |Net Interest Margin | |5, 60% |1, 86% | |Asset Utilization | |17. 86% |18. 46% | |Asset Utilization | |14, twenty percent |13, 38% | |Risk Ratios | | | | |Risk Ratios | | | | |Capital | | | | |Capital | | | | |Equity Multiplier | |16, 00 |15, 00 | |Equity Multiplier | |29, 02 |26, '07 | |Asset Quality | | | | |Asset Quality | | | | |Loss Rate | |0, 35% |0, 45% | |Loss Rate | |0, 56% |0, 66% | |Loan Rate | |55, 00% |53, 00% | |Loan Rate | |58, 82% |56, 13% | |Operating Efficiency (%of total assets) | | | | |Operating Efficiency (%of total assets) | | | | |Interest Expense | |6, fifty percent |6, 54% | |Interest Expense | |66, 67% |70, 54% | |Wages and Incomes | |1, 72% |1, 74% | |Wages and Salaries | |16, 67% |13, 95% | |Occupancy | |0, 48% |0, 49% | |Occupancy | |5, 00% |4, 65% | |PLL | |0, 30% |0, 32% | |PLL | |3, 33% |3, 10% | |Other Expenses | |0, 85% |0, 85% | |Other Expenses | |8, 33% |7, 75% | |Liquidity | | | | |Liquidity | | | | |Cash Ratio | |17, 00% |17, 00% | |Cash Ratio | |28, 58% |30, 87% | |Cash and Investments Ratio | |36, 00% |37, 00% | |Cash and Investments Ratio | |33, 19% |35, 36% | |Other Financial Ratios | | | | |Other Monetary Ratios | | | | |Tax Rate | |50, 00% |50, 00% | |Tax Rate | |46, 94% |50, 00% | |Dollar Gap Rate | | -15, 00% | -10, 00% | |Dollar Gap Rate | |-34, 37% |-29, 19% |

(* The calculations designed for deriving the above mentioned ratios will be shown within the last page)

three or more. 1(b)

With this part, we are going to talk about the Z-BANKS profitability by inspecting the Profitability Proportions that we have computed to the previously mentioned table. Furthermore, we are going to evaluate Z-BANK'S overall performance in the pyear's 20XX-1 and 20XX with all the performance with the Z-BANK'S Expert Group in the same years.

Because the main objective of bank management should be the optimization of investors wealth, a great starting point inside the analysis of Z-BANK'S economical performance may be the Return on Equity (ROE) rate.

Even as can see in the above table in the year 200XX-1 Z-BANK'S ROE (50%) was way greater that those of the Peer Group (20%), which indicates that at that period the Z-BANK has a improved productivity and was more competitive than the Peer Group. Nevertheless , in the year 20XX we can see that Z-BANK a new dramatic reduction in its' ROE (14. 63%), which is a whole lot worse than the ROE of the Peer Group (18%). Although both equally Banks had a decrease in their ROE in 20XX if we compare their particular growth rates Z-BANKS ROE decreased simply by 70. 74% while the Expert Groups Roe decreased only by 10%. This dramatic decrease in Z-BANK'S ROE may have a negative effect for the financial institution.

First of all, because a relatively lower ROE compared with additional banks, will certainly tend to cure the bank's entry to new capital that may be essential to expand and maintain a competitive position available in the market and subsequently, because a low ROE may limit the bank's progress because regulations require that assets certainly be a certain number of times equity capital.

To continuo, another profitability percentage is the Return on Assets (ROA). ROA measures the ability of management to utilize the true and money of the lender to generate earnings.

We can see that in 20XX-1, Z-BANK'S ROA is better that that of the Peer Group but again in 20XX you observe that Z-BANK'S ROA include a significant loss of 69. 73% and now Expert Group has a better ROA. This means that...