Question

please help question 6. this question is intended for personal knowldege and not for assignment purposes.

. Questions SJK Bank has been operating for the past five years. The most recent cation of indications for its financial performance are given in the table below 2010 2011 2012 LLC 2013 19 Ford 3267 214 Capital Adequas Total Capital/ Total assets Total Capital / Grow Advances Total risk weghed asset 0.1 GTUK 57. SS19 Liquidity Gross loans Advances Total Assets Cash, cash due from BOT banks and dearance to Total assets Loans to Total deposit 2 Asseus Quality Specific Provision Grou Advances Nonperforming loans and advances 2.35 FN JOk Bank Financial Management by CamScanner to Total Advances Delinquency balance credere daya Profitabiliz Return on Aneta Return on Equity Non-Interest income Gros Income Cost of funds interest Paid deposit 4276212609 423670 051161031 (1) Discon financial pafomance of SJK Bank for each of the four performance indicated in the above table ( 12 macka) (6) What other non-financial performance manus should be considered when performance of SJK Bank (maks buting

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i have taken a clearer picture. please help this question is intended for personal knowledge and not for assignment purposes

Answer 1

In this case there are four profitability measures given:

1. Return on Assets or ROI:

Return on Assets or ROI	2010	2011	2012	2013
	-26	-4	1	5

If we see the return on assets over the year it is increasing, like in 2010 it was -26 which indicates that on $1 of investment in assets it is giving negative returns of $26. It can be because of in that year bank might have started their journey and in initial stage any business suffers and they have less earning but huge investments. But if we see the returns after one year it has improved very much. So the ROI or return on assets of a bank tells us how efficiently management is using its assets for their earnings.

2. Return on Equity:

Return on Equity	2010	2011	2012	2013
	-42.6	-12.6	4.09	28.93

Return on equity is a measure of earnings of the shareholders of any business on their investments.

So if we see the ROE of SJK Bank in initial stages of its operation it is negative that means on 1$ of investments made by its shareholders it is giving -42.6% in 2010, -12.6 in 2011 and so on.

But if we see further it is improving continuously and in year 2013 it is 28% which more than the most analyst consider good for any bank.

So if talk about the profitability of SJK bank it is profitable because now its giving 28% returns where most of the banks are giving 15% return.

3. Non-interest Income:
Non- interest income is another very important measure of banks income or earnings. When banks deposit rates and banks lendings rates have not much difference then this measure becomes the strategic line for the banks earnings. It includes earnings from penalties for not maintaing minimum balances, deposit and transaction fees, annual fees, monthly account service charges, inactivity fees, check and deposit slip fees, and so on. Credit card issuers also charge penalty fees, including late fees and over-the-limit fees. So these are the fees bank charges apart from the cost of borrowings.

If we see the SJK Bank's non-interest income in 2010 it is 42.36 and in 2011 it is 70 that suggests that between year 2010 and 2011 the interest rates spread was very less and banks have charged more fee on their services for earnings but these charges are very annoying for the customers. But if we see year 2013 it has decreased that suggest that banks have enough income from their lending and interest rate spread was more.

4. Cost of Interest paid or Deposits:

Cost of deposits for any bank is a charge for the bank which banks pays to the customers for keeping their money into bank. If we see cost of deposits from year 2010 to 2013 it has increased for some years and for some it has decreased. That means banks for some years had paid more money and for some less on customers deposits based on the interest rates for that period.