bank performance & profitability analysis format.docx

8/10/2019 Bank Performance & Profitability Analysis Format.docx

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Bank Performance & Profitability Analysis

Model format for Comparative Analysis

Basic parameters

No. of employees No. of branches No. of ATMs

Key balance sheet parameters

Parameter 03/11 03/12 03/13 03/14

Deposits

Growth/change(YOY)

Advances

Growth

Total business mix

(deposits+advances)

Growth

CASA ratio

(CASA/Total deposits)Shareholders equity

TOTAL ASSETS


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ASSET QUALITY RATIOS:

Parameter 03/10 03/11 03/12 03/13

1.Gross loans or Credit

2.Gross NPA

3.NPA provisions

4.Net NPA (2-3)

5. Net loan or credit (1-3)

6. Gross NPA ratio (Gross NPA to Gross

Credit)= 2/1

7. Net NPA ratio (Net NPA to Net Credit) =

4/5

8.Povision Coverage Ratio (PCR) = 3/2*

*RBI target for PCR is 70% by Sept. 2010 for All Commercial Banks

SUMMARY P&L PARAMETERS

Parameter 03/10 03/11 03/12 03/13

1.Interest income

2. Interest expenditure

3. Net interest income (NII)

(1-2)

4. Non interest income

5. Total Operating income (1+4)

6. Net operating income(3+4)

7. Operating expenditure

8. Operating profit (6-7)

9. Provisions & contingencies

10. Profit after tax (8-9)


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Performance and Profitability ratios:

Parameter 03/10 03/11 03/12 03/13

NIM

Cost to income ratio

% of Non interest income to Total operating income

Overhead efficiency (Non Int. Income/Non Int. Exp.)

Efficiency Ratio (Non Int. Exp/(Net Int. Income +

Non Int. Income)

ROA (AU*NPM)

AU

NPMROE (ROA*EM)

EM (A/E)

Productivity ratios:

Parameter 03/10 03/11 03/12 03/13

Avg. profit per

employee (Net

Income/avg.

no. of

employees)

Avg. business

per employee

(Bus. Mix/ avg.

no. of

employees)

Avg. profit per

branch

Avg. business

per branch


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Vulnerability ratios or Capital Risk ratios or Solvency ratios:

Parameter 03/10 03/11 03/12 03/13

Tier-1 capital

Tier-2 capital

Total capital

funds

(T-1 + T-2)

CAR or CRAR

(Basel-1)

CAR or CRAR

(Basel-2)

Space for your Analysis/Arguments (with graphs/charts/tables etc.):

Note: Presentation and deliberation on Comparative Performance/Profitability/Productivity

evaluation of the bank-pair allotted to each group for the last 4 years (FY 10, 11, 12 & 13

group wise. Submit soft copies of both PPT & Report and hard copies of report only through the

CR. Report not to exceed 8 10 A4 size pages. PPT not to exceed 20 Nos.

This format should be part of your report but your report should contain more than that. The

report should contain your analysis, arguments and graphs/tables for comparison.


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Dena bank

parameters 2013-14 2012-13 2011-12 2010-11

Net interestincome

2.52 2.80 3.17 3.17

Cost to income

ratio

48.16 42.77 43.04 46.73

% of Non-

interest income

to Total

operating income

51.63 37.69 38.08 43.62

Overhead

efficiency (Non

Int. Income/Non

Int. Exp.)

.55 .504 .3808 .4973

Efficiency Ratio

(Non Int.

Exp/(Net Int.

Income + Non

Int. Income)

.48 .42 .43 .46

ROA (AU*NPM) .51 .86 1.08 1

AU .091 .095 .093 .086

NPM .050 .084 .108 .109

ROE (ROA*EM) 8.91 18.017 20.61 19.37

EM (A/E) 17.48 20.95 19.09 19.37

Punjab and sind bank


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parameters 2013-14 2012-13 2011-12 2010-11

Net interestMargin

1.88 2.15 2.66 2.45

Cost to income

ratio

60.90 54.99 60.38 49.26

% of Non-

interest income

to Total

operating income

21.34 20.51 20.54 21.39

Overhead

efficiency (Non

Int. Income/Non

Int. Exp.)

.35 .37 .34 .43

Efficiency Ratio

(Non Int.

Exp/(Net Int.

Income + Non

Int. Income)

.60 .54 .59 .49

ROA (AU*NPM) .13 .63 .35 .44

AU .014 .0974 .081 .012

NPM .097 .065 .043 .036ROE (ROA*EM) 2.6 10.773 6.11 8.29

EM (A/E) 20 17.10 17.47 18.85

PARAMETERS Dena(14-13)

P & s(14-13)

Dena(13-12)

P & s(13-12)

Dena(12-11)

P & s(12-11)

Dena(11-10)

P & s(11-10)


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Net interestMargin

2.52 1.88 2.80 2.15 3.17 2.66 3.17 2.45

Cost to incomeratio

48.16 60.90 42.77 54.99 43.04 60.38 46.73 49.26

% of Non-interestincome to Totaloperating income

51.63% 21.34 37.69% 20.51 38.08% 20.54 43.62% 21.39

Overheadefficiency (Non Int.

Income/Non Int.Exp.)

.55 .35 .504 .37 .3808 .34 .4973 .43

Efficiency Ratio(Non Int. Exp/(NetInt. Income + Non

Int. Income)

.48 .60 .42 .54 .43 .59 .46 .49

ROA (AU*NPM) .51 .13 .86 .63 1.08 .35 1 .44

AU .091 .014 .095 .0974 .093 .081 .086 .012

NPM .050 .097 .084 .065 .108 .043 .109 .036

ROE (ROA*EM) 8.91 2.6 18.017 10.773 20.61 6.11 19.37 8.29

EM (A/E) 17.48 20 20.95 17.10 19.09 17.47 19.37 18.85

Net interest margin: A performance metric that examines how successful a firm's investment

decisions are compared to its debt situations. In the above graph net interest margin of Dena


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bank has falling trend means that banks investment decision are not that successful as it was inFY 11.

Cost to income ratio: This ratio gives investors a clear view of how efficiently the firm is beingrun the lower it is, the more profitable the bank will be. So, above data indicates that Dena

bank had made losses in FY 13 to that of FY 10, 11, 12. Also it means that cost are rising at ahigher rate than income.

Non-interest income level / % of non-interest income to total operating income: Thismeasures total non-interest income as a proportion of operating income. Above graph shows thatthere is slight increment in the proportion of the profits coming from all sources (including fee income)other than interest spreads as it got increased from 6.85% (FY 12) to 8.41% (FY 13). What is interest spread?

Interest spread is the difference between the average lending rate and the average borrowing ratefor a bank or other financial institution. It is:

(interest income interest earning assets) - (interest expense interest bearing liabilities)

This is very similar to interest margi. If a bank's lending was exactly equal to its borrowings (i.e.deposits plus other borrowing) the two numbers would be identical. In reality, bank also has itsshareholder's funds available to lend, but at the same time its lending is constrained by reserverequirements.

Changes in the spread are an indicator of profitability as the spread is where a bank makes itsmoney.

Efficiency ratio : In banking, a ratio of expenses to revenue. Given ratio in the above table are almostequal for the given financial years and are very low as much as .48% in FY13, banks always desires alower efficiency ratio because this means that bank is making more than it is spending and is therefore

on sound fiscal footing.

What Does Efficiency Ratio Mean?

A ratio used to calculate a bank's efficiency. Not all banks calculate the efficiency ratio the sameway. The ratio can be calculated one of fourways: (1) noninterest expense divided by total reven

ue less interest expense, (2) noninterest expense divided by net interest income beforeprovision f or loan losses, (3) noninterest expense divided by revenue, (4) operating expenses divided by feeincome plus tax equivalent netinterest income. In all four methods, an increase means the company is losing a larger percentage of its income to expenses. If the efficiencyratio is getting lower, it is good for the bank and its shareholders. Also referred to as the overhead burden or overhead efficiency ratio.


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Return on assets: ROA tells you what earnings were generated from invested capital (assets).ROA for public companies can vary substantially and will be highly dependent on the industry.This is why when using ROA as a comparative measure, it is best to compare it against acompany's previous ROA numbers or the ROA of a similar company.

The assets of the company are comprised of both debt and equity. Both of these types offinancing are used to fund the operations of the company. The ROA figure gives investors anidea of how effectively the company is converting the money it has to invest into net income.The higher the ROA number, the better, because the company is earning more money on lessinvestment.

Assets utilization ratio: Asset Utilization Assets utilization (activity, turnover) ratios reflects theway in which a company uses its assets to obtain revenue and profit. One example is how wellreceivables are turning into cash. The higher the ratio, the more efficiently the business managesits assets.

Net profit margin:

Net profit margin is one of the most closely followed numbers in finance. Shareholders look atnet profit margin closely because it shows how good a company is at converting revenue into

profits available for shareholders.

Net profit margin is often used to compare companies within the same industry, in a processknown as "margin analysis." Net profit margin is a percentage of sales, not an absolute number,so it can be extremely useful to compare net profit margins among a group of companies to see

which are most effective at converting sales into profits.Return on equity: The return on equity ratio (ROE) measures how much the shareholdersearned for their investment in the company. The higher the ratio percentage, the more efficientmanagement is in utilizing its equity base and the better return is to investors.

Equity multiplier: The ratio of a companys total assets to its stockholders equity. The equitymultiplier is a measurement of a companys financial leverage. Companies finance the purchaseof assets either through equity or debt, so a high equity multiplier indicates that a larger portionof asset financing is being done through debt. The multiplier is a variation of the debt ratio.

The equity multiplier gives investors an insight into what financing methods a company may beable to use to finance the purchase of new assets. It's also an indicator of potential threats acompany may face from economic conditions that affect the debt-equity mix.
http://www.investinganswers.com/financial-dictionary/businesses-corporations/revenue-5108http://www.investinganswers.com/financial-dictionary/businesses-corporations/revenue-5108http://www.investinganswers.com/financial-dictionary/businesses-corporations/revenue-5108http://www.investinganswers.com/financial-dictionary/businesses-corporations/revenue-5108


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bank performance & profitability analysis format.docx

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