BUS442 – Reading Material
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Banking and Financial Structure BUS 442 Class Presentation Slides .pdf
Project Paper Sample Ratios
BANK RATIO ANALYSIS
Ratio analysis for Banks
Formulated by: Bulent Senver
Bülent Şenver
I. Earnings and Efficiency Profitability Ratios
Return on Asset (ROA)
Net Income / Total Average Assets
Return on Equity (ROE)
Net Income / Total Average Share Holders Equity
Income Expense Ratio
Total Income / Total Expense
Avarage Return of Interest Earning Assets
Total Interest Income / Total Average Interest Earning Assets
Avarage Cost of Funds
Total Interest Expense / Total Average Interest Bearing Liablities
Ratio of Non Interest Income to Non Interest Expense
Non Interest Income / Non Interest Expense
Break-Even Ratio
(Total Expenses – Non Interest Income) / Total Average Interest Earning Assets
Ratio of Net Interest Income to Avarage Total Assets
Net Interest Income / Total Average Assets
Ratio of Total Operating Expenses to Total Income
(Total Operating Expense / Total Operating Income)
Ratio of Interest Expense to Interest Income
Interest Expense / Interest Income
Percantage of Non-Interest Income in Total Income
(Non-Interest Income / Total Income)
Operating Expenses required to Manage Assets
(Operating Expense / Total Average Assets)
Interest Profitability of Interest Earning Assets
Net Interest Income / Average Total Interest Earning Assets
Average Return on Loans
(Interest Income on Loans / Average Total Loans)
Efficiency Ratios
Non Interest Expense /( Interest Income – Interest Expense + Non Interest Income)
Net Free Funds Ratio
(Non Interest Bearing Liabilities – Non Interest Earning Assets / Average Interest Earning Assets)
Interest Rate Sensitivity Gap
Interest Rate Sensitive Assets ( minus ) Interest Rate Sensitive Liabilities
Interest Rate Sensitivity Gap Ratio :
Interest Rate Sensitive Assets / Interest Rate Sensitive Liabilities
II. Capital Adequacy Ratios
Financial Leverage
Total Assets / Total Share Holders Equity
Ratio of Non-Interest Investments financed by SHEQ
(Equity Participations + Fixed Assets) / SHEQ
The Ratio of Foreign Exchange Position to SHEQ
(Foreign Currecy Assets – Foreign Currency Liabilities) / SHEQ
Ratio of SHEQ to Total Risks
SHEQ / (Total Assets+Total Contingent Liabilities and Commitments)
Ratio of Net Free-Funds to Total Assets
(SHEQ-(Equity Participations+Fixed Assets)) / Total Assets
Ratio of SHEQ as a Percantage of Total Assets
SHEQ / Total Assets
Ratio of SHEQ to Risk Weighted Assets and
Contingent Liabilites and Commitments
SHEQ / (Risk Weighted Assets + Risk Weighted Contingent Liabilites and Commitments)
Debt to Equity Ratio
Total Debt / SHEQ
Capital Formation Rate
(Net Income – Dividends to be paid) / Average SHEQ
III. Liquidity Ratios
Deposit to Loan Ratio
Total Loans / Total Deposits
Liquid Assets as a percentage of Deposits and Borrowings
Liquid Assets / (Total Deposits + Total Borrowings)
Ratio of Foreign Currency Assets to Foreign Currency Liabilities
Foreign Currency Assets / Foreign Currency Liabilities
Percentage of Liquid Assets in Total Assets
Foreign Currency Assets / Foreign Currency Liabilities
Liquidity Position for a Specific Period
(Assets Due for a specific Period / Liabilities Due for the same Period)
Volatile Deposits Ratio
Large Volatile Deposits / Total Deposits
Percentage of Interest Earning Assets Funded by Core Assets
Core Deposits / Interest Earning Assets
IV. Asset Quality Ratios
Percentage of Loans in Total Assets
Total Loans / Total Assets
Ratio of Interest Earning Assets to Total Assets
Interest Earning Assets / Total Assets
Ratio of Contingent Liabilites and Commitments
Total Contingent Liabilites and Commitments / Total Assets
Percentage of Non-Performing Loans in Total Loans
Non-Performing / Total Loans
Non-Performing Loan Reserve Ratio
Specific Loan Reserves / Non-Performing Loans
Ratio of Non-Interest Earning Assets in Total Assets
(Equity Participations+Fixed Assets+Other Non-Interest Earning Assets) / Total Assets
Interest Earning Assets Funded by Net Free Funds
(Non Interest Bearing Liabilities-Non Interest Earning Assets) / Interest Earning Assets
Ratio of Loan Losses Expense to Total Loans
Non Performing Loans Provision expense / Average Loans
Percentage of Loans Written off
Net Charge-Offs / Average Loans
Ratio of Non-Interest Earning Assets to Total Assets
Non-Interest Earning Assets / Total Assets
Loan Concentration Risk Ratio
Total Big Loans / Total Loans
V. Off Balance Sheet Ratios
Contingent Liabilites to Loans Ratio
Total Contingent Liabilities & Commitments / Total Loans
Contingent Liabilites to Assets Ratio
Total Contingent Liabilites & Commitments/ Total Assets
Return on Contingent Liabilites
Commission Income on Contingent Liabilites & Commitments / Average Contingent Liabilites & Commitments
Operations Management in Banking