Question

during the european debt crisis (2011), why the asia bank's income ratio have slightly increase? (income ratios=(interest income/ total asset)+(non interest income/ total asset))

just give some reasons and explain

Answer 1

There are some reasons for the decrease in income ratios. The first reason is the investment exposure made in financial instruments of these troubled nations. It made asset to remain unchanged, but interest income stopped coming to the Asian banks. As a result, income ratio decreased. The second reason is the decrease in interest income that should come from the debt ownership. It led to the further decrease in the interest income and income ratio suffered. The third reason is the stringent policies implemented by the government of these Asian nations whose banks had to comply and in the light of it, these banks could not give loans in liberal ways. It made interest income to be stagnant, though assets part increased. It made income ratio to decrease.