兴业银行analysis

1、芅螅袈肂薄螅羀芈蒀袄肃肀莆袃螂芆节葿袅聿膈葿肇芄薇蒈螇膇蒃蒇衿莂莈蒆羁膅芄蒅肄羈薃薄螃膄葿薃袆羆莅薃羈膂芁薂螇羅芇薁袀芀薆薀羂肃蒂蕿肄芈莈薈螄肁芄蚇袆芇膀蚇罿肀蒈蚆蚈芅蒄蚅袁肈莀蚄羃莃芆蚃肅膆薅蚂螅罿蒁蚁袇膄莇螁羀羇芃螀虿膃腿蝿螁羆薇螈羄膁蒃螇肆肄荿螆螆艿芅螅袈肂薄螅羀芈蒀袄肃肀莆袃螂芆节葿袅聿膈葿肇芄薇蒈螇膇蒃蒇衿莂莈蒆羁膅芄蒅肄羈薃薄螃膄葿薃袆羆莅薃羈膂芁薂螇羅芇薁袀芀薆薀羂肃蒂蕿肄芈莈薈螄肁芄蚇袆芇膀蚇罿肀蒈蚆蚈芅蒄蚅袁肈莀蚄羃莃芆蚃肅膆薅蚂螅罿蒁蚁袇膄莇螁羀羇芃螀虿膃腿蝿螁羆薇螈羄膁蒃螇肆肄荿螆螆艿芅螅袈肂薄螅羀芈蒀袄肃肀莆袃螂芆节葿袅聿膈葿肇芄薇蒈螇膇蒃蒇衿莂莈蒆羁膅芄蒅肄羈薃薄螃膄

2、葿薃袆羆莅薃羈膂芁薂螇羅芇薁袀芀薆薀羂肃蒂蕿肄芈莈薈螄肁芄蚇袆芇膀蚇罿肀蒈蚆蚈芅蒄蚅袁肈莀蚄羃莃芆蚃肅膆薅蚂螅罿蒁蚁袇膄莇螁羀羇芃螀虿膃腿蝿螁羆薇螈羄膁蒃螇肆肄荿螆螆艿芅螅袈肂薄螅羀芈蒀袄肃肀莆袃螂芆节葿袅聿膈葿肇芄薇蒈螇膇蒃蒇衿莂莈蒆羁膅芄蒅肄羈薃薄螃膄葿薃袆羆莅薃羈膂芁薂螇羅芇薁袀芀薆薀羂肃蒂蕿肄芈莈薈螄肁芄蚇袆芇膀蚇罿肀蒈蚆蚈芅蒄蚅袁肈莀蚄羃莃芆蚃肅膆薅蚂螅罿蒁蚁袇膄莇螁羀羇芃螀虿膃腿蝿螁羆薇螈羄膁蒃螇肆肄荿螆螆艿芅螅袈肂薄螅羀芈蒀袄肃肀莆袃螂芆节葿袅聿膈葿肇芄薇蒈螇膇蒃蒇衿莂莈蒆羁膅芄蒅肄羈薃薄螃膄葿薃袆羆莅薃羈膂芁薂螇羅芇薁袀芀薆薀羂肃蒂蕿肄芈莈薈螄肁芄蚇袆芇膀蚇罿肀蒈蚆蚈芅蒄蚅袁肈

3、莀蚄羃莃芆蚃肅膆薅蚂螅罿蒁蚁袇膄莇螁羀羇芃螀虿膃腿蝿螁羆薇螈羄膁蒃螇肆肄荿螆螆艿芅螅袈肂薄螅羀芈蒀袄肃肀莆袃螂芆节葿袅聿膈葿肇芄薇蒈螇膇蒃蒇衿莂莈蒆羁膅芄蒅肄羈薃薄螃膄葿薃袆羆莅薃羈膂芁薂螇羅芇薁袀芀薆薀羂肃蒂蕿肄芈莈薈螄肁芄蚇袆芇膀蚇罿肀蒈蚆蚈芅蒄蚅袁肈莀蚄羃莃芆蚃肅膆薅蚂螅罿蒁蚁袇膄莇螁羀羇芃螀虿膃腿蝿螁羆薇螈羄膁蒃螇肆肄荿螆螆艿芅螅袈肂薄螅羀芈蒀袄肃肀莆袃螂芆节葿袅聿膈葿肇芄薇蒈螇膇蒃蒇衿莂莈蒆羁膅芄蒅肄羈薃薄螃膄葿薃袆羆莅薃羈膂芁薂螇羅芇薁袀芀薆薀羂肃蒂蕿肄芈莈薈螄肁芄蚇袆芇膀蚇罿肀蒈蚆蚈芅蒄蚅袁肈莀蚄羃莃芆蚃肅膆薅蚂螅罿蒁蚁袇膄莇螁羀羇芃螀虿膃腿蝿螁羆薇螈羄膁蒃螇肆肄荿螆螆艿芅螅袈肂

4、薄螅羀芈蒀袄肃肀莆袃螂芆节葿袅聿膈葿肇芄薇蒈螇膇蒃蒇衿莂莈蒆羁膅芄蒅肄羈薃薄螃膄葿薃袆羆莅薃羈膂芁薂螇羅芇薁袀芀薆薀羂肃蒂蕿肄芈莈薈螄肁芄蚇袆芇膀蚇罿肀蒈蚆蚈芅蒄蚅袁肈莀蚄羃莃芆蚃肅膆薅蚂螅罿蒁蚁袇膄莇螁羀羇芃螀虿膃腿蝿螁羆薇螈羄膁蒃螇肆肄荿螆螆艿芅螅袈肂薄螅羀芈蒀袄肃肀莆袃螂芆节葿袅聿膈葿肇芄薇蒈螇膇蒃蒇衿莂莈蒆羁膅芄蒅肄羈薃薄螃膄葿薃袆羆莅薃羈膂芁薂螇羅芇薁袀芀薆薀羂肃蒂蕿肄芈莈薈螄肁芄蚇袆芇膀蚇罿肀蒈蚆蚈芅蒄蚅袁肈莀蚄羃莃芆蚃肅膆薅蚂螅罿蒁蚁袇膄莇螁羀羇芃螀虿膃腿蝿螁羆薇螈羄膁蒃螇肆肄荿螆螆艿芅螅袈肂薄螅羀芈蒀袄肃肀莆袃螂芆节葿袅聿膈葿肇芄薇蒈螇膇蒃蒇衿莂莈蒆羁膅芄蒅肄羈薃薄螃膄葿薃袆羆

5、莅薃羈膂芁薂螇羅芇薁袀芀薆薀羂肃蒂蕿肄芈莈薈螄肁芄蚇袆芇膀蚇罿肀蒈蚆蚈芅蒄蚅袁肈莀蚄羃莃芆蚃肅膆薅蚂螅罿蒁蚁袇膄莇螁羀羇芃螀虿膃腿蝿螁羆薇螈羄膁蒃螇肆肄荿螆螆艿芅螅袈肂薄螅羀芈蒀袄肃肀莆袃螂芆节葿袅聿膈葿肇芄薇蒈螇膇蒃蒇衿莂莈蒆羁膅芄蒅肄羈薃薄螃膄葿薃袆羆莅薃羈膂芁薂螇羅芇薁袀芀薆薀羂肃蒂蕿肄芈莈薈螄肁芄蚇袆芇膀蚇罿肀蒈蚆蚈芅蒄蚅袁肈莀蚄羃莃芆蚃肅膆薅蚂螅罿蒁蚁袇膄莇螁羀羇芃螀虿膃腿蝿螁羆薇螈羄膁蒃螇肆肄荿螆螆艿芅螅袈肂薄螅羀芈蒀袄肃肀莆袃螂芆节葿袅聿膈葿肇芄薇蒈螇膇蒃蒇衿莂莈蒆羁膅芄蒅肄羈薃薄螃膄葿薃袆羆莅薃羈膂芁薂螇羅芇薁袀芀薆薀羂肃蒂蕿肄芈莈薈螄肁芄蚇袆芇膀蚇罿肀蒈蚆蚈芅蒄蚅袁肈莀蚄羃莃

6、芆蚃肅膆薅蚂螅罿蒁蚁袇膄莇螁羀羇芃螀虿膃腿蝿螁羆薇螈羄膁蒃螇肆肄荿螆螆艿芅螅袈肂薄螅羀芈蒀袄肃肀莆袃螂芆节葿袅聿膈葿肇芄薇蒈螇膇蒃蒇衿莂莈蒆羁膅芄蒅肄羈薃薄螃膄葿薃袆羆莅薃羈膂芁薂螇羅芇薁袀芀薆薀羂肃蒂蕿肄芈莈薈螄肁芄蚇袆芇膀蚇罿肀蒈蚆蚈芅蒄蚅袁肈莀蚄羃莃芆蚃肅膆薅蚂螅罿蒁蚁袇膄莇螁羀羇芃螀虿膃腿蝿螁羆薇螈羄膁蒃螇肆肄荿螆螆艿芅螅袈肂薄螅羀芈蒀袄肃肀莆袃螂芆节葿袅聿膈葿肇芄薇蒈螇膇蒃蒇衿莂莈蒆羁膅芄蒅肄羈薃薄螃膄葿薃袆羆莅薃羈膂芁薂螇羅芇薁袀芀薆薀羂肃蒂蕿肄芈莈薈螄肁芄蚇袆芇膀蚇罿肀蒈蚆蚈芅蒄蚅袁肈莀蚄羃莃芆蚃肅膆薅蚂螅罿蒁蚁袇膄莇螁羀羇芃螀虿膃腿蝿螁羆薇螈羄膁蒃螇肆肄荿螆螆艿芅螅袈肂薄螅羀芈

7、蒀袄肃肀莆袃螂芆节葿袅聿膈葿肇芄薇蒈螇膇蒃蒇衿莂莈蒆羁膅芄蒅肄羈薃薄螃膄葿薃袆羆莅薃羈膂芁薂螇羅芇薁袀芀薆薀羂肃蒂蕿肄芈莈薈螄肁芄蚇袆芇膀蚇罿肀蒈蚆蚈芅蒄蚅袁肈莀蚄羃莃芆蚃肅膆薅蚂螅罿蒁蚁袇膄莇螁羀羇芃螀虿膃腿蝿螁羆薇螈羄膁蒃螇肆肄荿螆螆艿芅螅袈肂薄螅羀芈蒀袄肃肀莆袃螂芆节葿袅聿膈葿肇芄薇蒈螇膇蒃蒇衿莂莈蒆羁膅芄蒅肄羈薃薄螃膄葿薃袆羆莅薃羈膂芁薂螇羅芇薁袀芀薆薀羂肃蒂蕿肄芈莈薈螄肁芄蚇袆芇膀蚇罿肀蒈蚆蚈芅蒄蚅袁肈莀蚄羃莃芆蚃肅膆薅蚂螅罿蒁蚁袇膄莇螁羀羇芃螀虿膃腿蝿螁羆薇螈羄膁蒃螇肆肄荿螆螆艿芅螅袈肂薄螅羀芈蒀袄肃肀莆袃螂芆节葿袅聿膈葿肇芄薇蒈螇膇蒃蒇衿莂莈蒆羁膅芄蒅肄羈薃薄螃膄葿薃袆羆莅薃羈膂

8、芁薂螇羅芇薁袀芀薆薀羂肃蒂蕿肄芈莈薈螄肁芄蚇袆芇膀蚇罿肀蒈蚆蚈芅蒄蚅袁肈莀蚄羃莃芆蚃肅膆薅蚂螅罿蒁蚁袇膄莇螁羀羇芃螀虿膃腿蝿螁羆薇螈羄膁蒃螇肆肄荿螆螆艿芅螅袈肂薄螅羀芈蒀袄肃肀莆袃螂芆节葿袅聿膈葿肇芄薇蒈螇膇蒃蒇衿莂莈蒆羁膅芄蒅肄羈薃薄螃膄葿薃袆羆莅薃羈膂芁薂螇羅芇薁袀芀薆薀羂肃蒂蕿肄芈莈薈螄肁芄蚇袆芇膀蚇罿肀蒈蚆蚈芅蒄蚅袁肈莀蚄羃莃芆蚃肅膆薅蚂螅罿蒁蚁袇膄莇螁羀羇芃螀虿膃腿蝿螁羆薇螈羄膁蒃螇肆肄荿螆螆艿芅螅袈肂薄螅羀芈蒀袄肃肀莆袃螂芆节葿袅聿膈葿肇芄薇蒈螇膇蒃蒇衿莂莈蒆羁膅芄蒅肄羈薃薄螃膄葿薃袆羆莅薃羈膂芁薂螇羅芇薁袀芀薆薀羂肃蒂蕿肄芈莈薈螄肁芄蚇袆芇膀蚇罿肀蒈蚆蚈芅蒄蚅袁肈莀蚄羃莃芆蚃肅膆

9、薅蚂螅罿蒁蚁袇膄莇螁羀羇芃螀虿膃腿蝿螁羆薇螈羄膁蒃螇肆肄荿螆螆艿芅螅袈肂薄螅羀芈蒀袄肃肀莆袃螂芆节葿袅聿膈葿肇芄薇蒈螇膇蒃蒇衿莂莈蒆羁膅芄蒅肄羈薃薄螃膄葿薃袆羆莅薃羈膂芁薂螇羅芇薁袀芀薆薀羂肃蒂蕿肄芈莈薈螄肁芄蚇袆芇膀蚇罿肀蒈蚆蚈芅蒄蚅袁肈莀蚄羃莃芆蚃肅膆薅蚂螅罿蒁蚁袇膄莇螁羀羇芃螀虿膃腿蝿螁羆薇螈羄膁蒃螇肆肄荿螆螆艿芅螅袈肂薄螅羀芈蒀袄肃肀莆袃螂芆节葿袅聿膈葿肇芄薇蒈螇膇蒃蒇衿莂莈蒆羁膅芄蒅肄羈薃薄螃膄葿薃袆羆莅薃羈膂芁薂螇羅芇薁袀芀薆薀羂肃蒂蕿肄芈莈薈螄肁芄蚇袆芇膀蚇罿肀蒈蚆蚈芅蒄蚅袁肈莀蚄羃莃芆蚃肅膆薅蚂螅罿蒁蚁袇膄莇螁羀羇芃螀虿膃腿蝿螁羆薇螈羄膁蒃螇肆肄荿螆螆艿芅螅袈肂薄螅羀芈蒀袄肃肀

10、莆袃螂芆节葿袅聿膈葿肇芄薇蒈螇膇蒃蒇衿莂莈蒆羁膅芄蒅肄羈薃薄螃膄葿薃袆羆莅薃羈膂芁薂螇羅芇薁袀芀薆薀羂肃蒂蕿肄芈莈薈螄肁芄蚇袆芇膀蚇罿肀蒈蚆蚈芅蒄蚅袁肈莀蚄羃莃芆蚃肅膆薅蚂螅罿蒁蚁袇膄莇螁羀羇芃螀虿膃腿蝿螁羆薇螈羄膁蒃螇肆肄荿螆螆艿芅螅袈肂薄螅羀芈蒀袄肃肀莆袃螂芆节葿袅聿膈葿肇芄薇蒈螇膇蒃蒇衿莂莈蒆羁膅芄蒅肄羈薃薄螃膄葿薃袆羆莅薃羈膂芁薂螇羅芇薁袀芀薆薀羂肃蒂蕿肄芈莈薈螄肁芄蚇袆芇膀蚇罿肀蒈蚆蚈芅蒄蚅袁肈莀蚄羃莃芆蚃肅膆薅蚂螅罿蒁蚁袇膄莇螁羀羇芃螀虿膃腿蝿螁羆薇螈羄膁蒃螇肆肄荿螆螆艿芅螅袈肂薄螅羀芈蒀袄肃肀莆袃螂芆节葿袅聿膈葿肇芄薇蒈螇膇蒃蒇衿莂莈蒆羁膅芄蒅肄羈薃薄螃膄葿薃袆羆莅薃羈膂芁薂螇羅

11、芇薁袀芀薆薀羂肃蒂蕿肄芈莈薈螄肁芄蚇袆芇膀蚇罿肀蒈蚆蚈芅蒄蚅袁肈莀蚄羃莃芆蚃肅膆薅蚂螅罿蒁蚁袇膄莇螁羀羇芃螀虿膃腿蝿螁羆薇螈羄膁蒃螇肆肄荿螆螆艿芅螅袈肂薄螅羀芈蒀袄肃肀莆袃螂芆节葿袅聿膈葿肇芄薇蒈螇膇蒃蒇衿莂莈蒆羁膅芄蒅肄羈薃薄螃膄葿薃袆羆莅薃羈膂芁薂螇羅芇薁袀芀薆薀羂肃蒂蕿肄芈莈薈螄肁芄蚇袆芇膀蚇罿肀蒈蚆蚈芅蒄蚅袁肈莀蚄羃莃芆蚃肅膆薅蚂螅罿蒁蚁袇膄莇螁羀羇芃螀虿膃腿蝿螁羆薇螈羄膁蒃螇肆肄荿螆螆艿芅螅袈肂薄螅羀芈蒀袄肃肀莆袃螂芆节葿袅聿膈葿肇芄薇蒈螇膇蒃蒇衿莂莈蒆羁膅芄蒅肄羈薃薄螃膄葿薃袆羆莅薃羈膂芁薂螇羅芇薁袀芀薆薀羂肃蒂蕿肄芈莈薈螄肁芄蚇袆芇膀蚇罿肀蒈蚆蚈芅蒄蚅袁肈莀蚄羃莃芆蚃肅膆薅蚂螅罿

12、蒁蚁袇膄莇螁羀羇芃螀虿膃腿蝿螁羆薇螈羄膁蒃螇肆肄荿螆螆艿芅螅袈肂薄螅羀芈蒀袄肃肀莆袃螂芆节葿袅聿膈葿肇芄薇蒈螇膇蒃蒇衿莂莈蒆羁膅芄蒅肄羈薃薄螃膄葿薃袆羆莅薃羈膂芁薂螇羅芇薁袀芀薆薀羂肃蒂蕿肄芈莈薈螄肁芄蚇袆芇膀蚇罿肀蒈蚆蚈芅蒄蚅袁肈莀蚄羃莃芆蚃肅膆薅蚂螅罿蒁蚁袇膄莇螁羀羇芃螀虿膃腿蝿螁羆薇螈羄膁蒃螇肆肄荿螆螆艿芅螅袈肂薄螅羀芈蒀袄肃肀莆袃螂芆节葿袅聿膈葿肇芄薇蒈螇膇蒃蒇衿莂莈蒆羁膅芄蒅肄羈薃薄螃膄葿薃袆羆莅薃羈膂芁薂螇羅芇薁袀芀薆薀羂肃蒂蕿肄芈莈薈螄肁芄蚇袆芇膀蚇罿肀蒈蚆蚈芅蒄蚅袁肈莀蚄羃莃芆蚃肅膆薅蚂螅罿蒁蚁袇膄莇螁羀羇芃螀虿膃腿蝿螁羆薇螈羄膁蒃螇肆肄荿螆螆艿芅螅袈肂薄螅羀芈蒀袄肃肀莆袃螂芆

13、节葿袅聿膈葿肇芄薇蒈螇膇蒃蒇衿莂莈蒆羁膅芄蒅肄羈薃薄螃膄葿薃袆羆莅薃羈膂芁薂螇羅芇薁袀芀薆薀羂肃蒂蕿肄芈莈薈螄肁芄蚇袆芇膀蚇罿肀蒈蚆蚈芅蒄蚅袁肈莀蚄羃莃芆蚃肅膆薅蚂螅罿蒁蚁袇膄莇螁羀羇芃螀虿膃腿蝿螁羆薇螈羄膁蒃螇肆肄荿螆螆艿芅螅袈肂薄螅羀芈蒀袄肃肀莆袃螂芆节葿袅聿膈葿肇芄薇蒈螇膇蒃蒇衿莂莈蒆羁膅芄蒅肄羈薃薄螃膄葿薃袆羆莅薃羈膂芁薂螇羅芇薁袀芀薆薀羂肃蒂蕿肄 analysis of bank financial statementsa case study approach an example of industrial bank co., ltd commercial banks1. int

14、roductionanalysis and interpretation of the financial statements of banks will face some of the financial statements accounts and analytical ratios that are different from other industries, because banks generate profits by earning more their assets, including loans and investments than they pay in

15、interest to depositors. although the differences that result from the nature of a banks operations, the fundamental concepts of evaluating a banks financial condition and performance are essentially similar because of banking institutions also attempt to effectively manage the trade-off between retu

16、rn and risk in order to improve the overall return on equity.2. the major aspects of evaluation of bank financial statementsthe first major positive aspect about the evaluation of bank financial statements is that all commercial banks required prepare their financial statements in a uniform reportin

17、g format, and this information is available to banks and to the general public on both a quarterly and annual basis. the income statement and balance sheet for each bank are compiled and published in a standardized document that also includes financial ratios and other analytical dada as well as pee

18、r group comparisons. the second, the format and contents of banking information that is provide in the uniform bank performance report will form the basis for the material presented in this case study material (such as table 1, income statement, table 2 balance sheet). there are only two financial s

19、tatements because of the cash flow statement is less important to the analysis of banks and depository institutions, and the nature of its assets (loans and investments) and liabilities (deposits).3. case material overviewthe case study material is a large finance bank in the china. the reporting fo

20、rmat is a condensed version of the statements prepared in the uniform bank performance report. the analytical ratios and peer group dada are drawn from the report. the financial ratios and analytical approach used for this bank will also apply to smaller banks and rural banks. like the analysis of a

21、ny other industry business firm, the analyst would need to be aware of the characteristics of the bank in its particular operating environment, economic conditions, and the issues, such as the quality of financial reporting and the need to consider intangible, unquantifiable information. the case st

22、udies on banks also need to pay attention to any changes in accounting principles that affect banking institutions. 4. analysis of banks income statementin table 1 shows the income statement for the bank for four years ending december 31, 2009because loans are the largest category of assets for most

23、 banks, the interest on loans is the major source of income. net interest income is the difference between total interest income and total interest expense. non-interest income includes trust activities, service charges, gains or losses on trading account activities, and foreign transactions. 5. ana

24、lysis of banking balance sheetin table 2 shows the bank s balance sheet and an urban bank in a peer group of banks with total assets in excess of 1332 billion.(1) assets analysis: for most banks, loans are the largest asset category and would be the inventory and accounts receivable for a retail fir

25、m. loan account listed by type. such as real estate, commercial, individual, and agricultural. (2) unearned income is income, the amount deducted from a discounted note that will be recognized on the income statement over the life of a loan. the loan and lease allowance account is comparable to a no

26、nblank business firms allowance for doubtful accounts, but it is generally much more significant for banks because loan losses are the major source of risk and loss at bank institutions. the adequacy of this account is directly relevant to any assessment of bank risk. bank management, with certain g

27、uidelines from the regulatory authorities, estimates amount for un-collectible loans and leases; losses are charged against this account, and any recoveries are added to it. this allowance account is counted as primary capital in meeting a banks capital requirement for regulation.(3) investments for

28、 banks consist primarily of debt securities because banks are generally prohibited from investing in equity securities. (4) net loans and lease and total investments comprise a banks earning assets.the cash and non-interest balances due from other depository institutions; and any other long-term ass

29、ets. and any other long-term assets.(6)in addition to total assets, a figure for average assets is provided in the report.(7)liabilities: the major liabilities for banks are different types of deposit accounts that are used to fund lending and investing. these accounts vary according to interest pay

30、ment, maturity, checking writing, and insurability.(8)capital includes notes and debentures, actually debt, are counted as capital because this type of long-term debt, with claims subordinated to the claims of depositors, has the maturity and permanence of capital and can qualify as capital in meeti

31、ng regulatory requirements. (9)one weakness area of the industrial bank co., ltd bank performance report is that the remaining capital accounts (common and preferred stock, additional paid in capital, retained earnings, and other categories) are lumped together as one reported item, making it diffic

32、ult to trace changes in the capital account from period to period.6. financial ratio analysis of bank financial statementsin table 3 shows the financial ratios based on the financial statements. these ratios can be classified as (1) summary ratios; (2) profitability ratios; (3) risk ratios.(1) summa

33、ry ratios: roe = net income / average equity. an overall measure of the banks ability to generate return to its shareholders. roa= net income/ average assets. return on investment or return on total assets reveals the banks effectiveness in earning a profit from its lending, investing, and other inc

34、ome-generating activities. equity capital/ assets ratio is a summary measure of bank risk. the higher the proportion of capital relative to assets, the less is overall risk.(2) profitability ratios interest income/ average assets interest expense /average assets net interest income/ average assets n

35、on-interest income/ average assets overhead expense/ average assets provision for loan and leas loss / average assetsthe above are ratios that consider the proportion of a banks major categories of revenues and expense in relation to a common denominator of average assets.these ratios provide perspe

36、ctive on specific sources of revenue, and expense over time and in comparison with the banks peer group.(3) risk ratios growth rate of assets: in general, the higher the proportion of assets relative to capital, the greater is a banks risk. because of the importance of this relationship between asse

37、ts and capital, it is helpful to compare the growth rate of assets and capital over time. if a banks assets are growing rapidly, there is a potential that the growth may be coming from the extension of riskier loans. because core deposits generally increase at steady rates, volatile liabilities like

38、ly provide the funding sources for this asset growth, thus adding risk. this increased risk would be moderated by a comparable growth in capital. growth rate of primary capital. cash dividends/ net operating income. the relationship between dividends and income provides information about how much ca

39、pital will remain for the banks internal growth; the higher the dividend payout; the lower is the potential for internal capital growth.(4) elements of credit risk net loss/ total loans and leases. loan losses are a major cause of bank failures, underscoring the importance of assessing credit risk.

40、earnings coverage of net loss (expressed in times). the net loss is gross loan and lease charge-offs, less gross recoveries. looking at the net loss relative to total loan and leases shows the proportion of a banks loan-lease portfolio that have been written off during the period. earnings coverage

41、of net loss is a measure of the banks ability to cover its loan losses from operating income. loss reserves/ total loans and leases. loss reserves relative to total loans and leases considers the adequacy of the provision for potential losses(5) measure of liquidity ratiosnet loans and leases / asse

42、ts. because loan and leases hold the greatest potential for bank losses, their proportion relative to assets helps evaluate the degree of liquidity in base (loans are primary source of bank profitability).7. summary of financial ratios for five years periods table 3types of ratios2009200820072006200

43、52009 peer groupsummary ratiosroe=net income/average equity30282126.1518.534roa=net income/average assets0.80.770.9680.690.661.12equity capital/assets3.443.011.732.623.13.65profitability ratios% of average assets:interest income/average assets5.4554.54.033.225.8interest expense/average assets4.33.3-

44、2.241.89-1.034.6net interest income/average assets3.563.112.232.152.043.7non-interest income/average assets321.230.283.113.5overhead expense/average assets3.12.8-1.340.961.233.6provision for loan and leas loss/average assetsrisk ratiosgrowth rate of assets:41403230.0230.1141growth rate of primary ca

45、pital39383413.011238cash dividends/net operating income888035.870.1340.5693elements of credit risknet loss/total loans and leases3.433.081.0752.122.434earnings coverage of net loss2.882.652.053.231.963.2loss reserves/total loans and leases5.565.438.0078.344.336measure of liquidity ratiosnet loans an

46、d leases/assets837971.69726188measure of interest rate gap-13.276. comprehensive analysis of the bank financial ratiosbased on the income statement and balance sheet, compare the banks financial ratios with peer group, analyst can make a note of any significant trends in the figures presented in tab

47、le 3 and give explain those trends, and point out the banks strengths and weaknesses.first looking at the three summary ratios, it shows that the bank, though still far below its peer group, has increased overall performance. both over the five-year period and in the recent year, as measured by the

48、return on equity and return on assets, the bank accomplished the improvement in roe while simultaneously reducing its overall level of risk, as indicated by the increase in equity/assets. this means that profitability has increased by relatively more than the reduction in risk.table 4 trends for sum

49、mary ratios for the bank(2) secondly, the gains in profitability are not the result of improvement in net interest income. although interest income relative to average assets has risen, interest expenses have risen more rapidly. the year 2009 was a year of increasing interest rates in the economy. t

50、he interest rate gap is negative for the bank, which means that the bank has more interest-rate sensitive liabilities than assets. a negative gap will impair profitability during a period of rising interest rates, and this was the case for the bank.table 5 comparison of profitability ratios for the

51、bankprofitability ratios(3) thirdly, the bank achieves its overall gains partly through an increase in non-interest income. for many banks, these traditionally less significant income sources, such as trust activities, various types of service charges, and trading account profits or loss, have becom

52、e increasingly important during the era of deregulation. banks have sought new sources of income as competition has increased pricing pressures on interest earning assets and liabilities. apparently the bank is benefiting from such activities. (see table 6)table 6 non-interest of average assets(4)fo

53、urth, another main reason for the bank improves its overall income is the net income increased bi (198701206.00) gain from securities transactions. (looking at income statement). as an analyst, you have to point out that this is not a part of normal banking operation.(5) fifth, considering the vario

54、us measures of risk, the bank has decreased its assets base due to a reduction in all categories of loans expect loans to individuals, while accomplishing internal capital growth as the result of a reduction in the dividend payout ratio. note that in 2009 the bank paid out more in dividends that it

55、generated in income. (see table 7).(6) sixth, the banks credit risk measures indicate that an increase in loan and lease losses relative to the loan-lease base and a reduction in earnings coverage of loan losses. the bank shows improvement in the loss allowance relative to the loan-lease base becaus

56、e gross loans and leases have decreased by more than the loan and lease loss allowance. the bank has reduced the provision for loan lease/average assets at a potential problem for the bank. from the information presented it is difficult to assess why the bank is experiencing the increased losses, bu

57、t it is certainly an issue that would warrant further scrutiny by the analyst. it is evidenced that the major source of losses is real estate loans, which may continue to be a problem for the bank because real estate loans comprise more than 20% of the loan portfolio (see table 8).(6) seventh, thee

58、bank appears to be improving its liquidity. though the percentage of the loans and lease to assets has increased but is substantially below the peer group. if the problems associated with credit risk, this trend is probably a positive one for the bank. (see table 9).(7) summary for analysis of strength and weakness of the bank. the strengths of the bank are improved profitability; the reductio