Enviar pesquisa
Carregar
Chapter 6
•
Transferir como PPT, PDF
•
2 gostaram
•
1,767 visualizações
B
bethdemi
Seguir
Economia e finanças
Negócios
Vista de apresentação de diapositivos
Denunciar
Compartilhar
Vista de apresentação de diapositivos
Denunciar
Compartilhar
1 de 28
Baixar agora
Recomendados
Chap005
Chap005
bethdemi
Asset and liability management - Principles and Practices of Banking
Asset and liability management - Principles and Practices of Banking
VIRUPAKSHA GOUD
Basel norms I II III & Risk Management in Banks
Basel norms I II III & Risk Management in Banks
Abhijeet Deshmukh
Chap005
Chap005
bethdemi
Camels Rating
Camels Rating
Parveen Bari
Debenture dhaval ramani
Debenture dhaval ramani
Dhaval Ramani
Mortgage Market Presentation Pt. 1 & 2
Mortgage Market Presentation Pt. 1 & 2
lerogers
Financial Institutions
Financial Institutions
Ismatullah Butt
Recomendados
Chap005
Chap005
bethdemi
Asset and liability management - Principles and Practices of Banking
Asset and liability management - Principles and Practices of Banking
VIRUPAKSHA GOUD
Basel norms I II III & Risk Management in Banks
Basel norms I II III & Risk Management in Banks
Abhijeet Deshmukh
Chap005
Chap005
bethdemi
Camels Rating
Camels Rating
Parveen Bari
Debenture dhaval ramani
Debenture dhaval ramani
Dhaval Ramani
Mortgage Market Presentation Pt. 1 & 2
Mortgage Market Presentation Pt. 1 & 2
lerogers
Financial Institutions
Financial Institutions
Ismatullah Butt
What Is Credit
What Is Credit
Eastern New Mexico University
Cb lesson 5
Cb lesson 5
AIU (Albukhary International University)
Different Types of Loans Offered by Commercial Banks
Different Types of Loans Offered by Commercial Banks
Snqobile Ndebele
credit analysis process.pptx
credit analysis process.pptx
Vikash Barnwal
Indian finanacial Market
Indian finanacial Market
Mubashir Hassan
Introduction to islamic finance
Introduction to islamic finance
Alhuda Centre of Islamic Banking & Economics
NPA
NPA
guest6dbeb7
FM Chapter 13
FM Chapter 13
Dr. Muath Asmar
Types of deposits
Types of deposits
Sunita Sukhija
Principles of Sound lending.pptx
Principles of Sound lending.pptx
infantemiliya
Debentures- Types, Advantages and Disadvantages
Debentures- Types, Advantages and Disadvantages
nezreen ashraf
Updated fundamentals of investment.ppt
Updated fundamentals of investment.ppt
Romy Cagampan
Bonds and Its types
Bonds and Its types
Aiman Rana
Debt instruments
Debt instruments
Deepak Tandon
Collateral
Collateral
Kerine Williams
Introduction to investments
Introduction to investments
Mohammed Umair
Understanding and Predicting Ultimate Loss-Given-Default on Bonds and Loans
Understanding and Predicting Ultimate Loss-Given-Default on Bonds and Loans
Michael Jacobs, Jr.
Camel rating
Camel rating
Priya Tiwari
Central bank
Central bank
Sateesh Hotchandani
Bank loans
Bank loans
vanditshah
Chap001
Chap001
ukabuka
Chap006
Chap006
bethdemi
Mais conteúdo relacionado
Mais procurados
What Is Credit
What Is Credit
Eastern New Mexico University
Cb lesson 5
Cb lesson 5
AIU (Albukhary International University)
Different Types of Loans Offered by Commercial Banks
Different Types of Loans Offered by Commercial Banks
Snqobile Ndebele
credit analysis process.pptx
credit analysis process.pptx
Vikash Barnwal
Indian finanacial Market
Indian finanacial Market
Mubashir Hassan
Introduction to islamic finance
Introduction to islamic finance
Alhuda Centre of Islamic Banking & Economics
NPA
NPA
guest6dbeb7
FM Chapter 13
FM Chapter 13
Dr. Muath Asmar
Types of deposits
Types of deposits
Sunita Sukhija
Principles of Sound lending.pptx
Principles of Sound lending.pptx
infantemiliya
Debentures- Types, Advantages and Disadvantages
Debentures- Types, Advantages and Disadvantages
nezreen ashraf
Updated fundamentals of investment.ppt
Updated fundamentals of investment.ppt
Romy Cagampan
Bonds and Its types
Bonds and Its types
Aiman Rana
Debt instruments
Debt instruments
Deepak Tandon
Collateral
Collateral
Kerine Williams
Introduction to investments
Introduction to investments
Mohammed Umair
Understanding and Predicting Ultimate Loss-Given-Default on Bonds and Loans
Understanding and Predicting Ultimate Loss-Given-Default on Bonds and Loans
Michael Jacobs, Jr.
Camel rating
Camel rating
Priya Tiwari
Central bank
Central bank
Sateesh Hotchandani
Bank loans
Bank loans
vanditshah
Mais procurados
(20)
What Is Credit
What Is Credit
Cb lesson 5
Cb lesson 5
Different Types of Loans Offered by Commercial Banks
Different Types of Loans Offered by Commercial Banks
credit analysis process.pptx
credit analysis process.pptx
Indian finanacial Market
Indian finanacial Market
Introduction to islamic finance
Introduction to islamic finance
NPA
NPA
FM Chapter 13
FM Chapter 13
Types of deposits
Types of deposits
Principles of Sound lending.pptx
Principles of Sound lending.pptx
Debentures- Types, Advantages and Disadvantages
Debentures- Types, Advantages and Disadvantages
Updated fundamentals of investment.ppt
Updated fundamentals of investment.ppt
Bonds and Its types
Bonds and Its types
Debt instruments
Debt instruments
Collateral
Collateral
Introduction to investments
Introduction to investments
Understanding and Predicting Ultimate Loss-Given-Default on Bonds and Loans
Understanding and Predicting Ultimate Loss-Given-Default on Bonds and Loans
Camel rating
Camel rating
Central bank
Central bank
Bank loans
Bank loans
Destaque
Chap001
Chap001
ukabuka
Chap006
Chap006
bethdemi
Chapter07
Chapter07
Prachi Chitlangia
Jbl presentation 26.12.12“Identifying the Process and Measuring the Effective...
Jbl presentation 26.12.12“Identifying the Process and Measuring the Effective...
Shahriar Rawshon
Sample MCQ Practice Questions on International Marketing (April 2014)
Sample MCQ Practice Questions on International Marketing (April 2014)
GMAdvisor
Risk management
Risk management
Karishma Singh
Chapter 7
Chapter 7
bethdemi
Gap analysis in banks
Gap analysis in banks
has10nas
INTEREST RATE RISK
INTEREST RATE RISK
Ankur Shrivastava
Bank lendings and loans ppt
Bank lendings and loans ppt
Titiksha Chaturvedi
Banking ppt
Banking ppt
Rahul Mailcontractor
Asset Liability management in Banks
Asset Liability management in Banks
Pankaj Baid
INTEREST RATE RISK MANAGEMENT IN BANKS
INTEREST RATE RISK MANAGEMENT IN BANKS
IBS Business School
Destaque
(13)
Chap001
Chap001
Chap006
Chap006
Chapter07
Chapter07
Jbl presentation 26.12.12“Identifying the Process and Measuring the Effective...
Jbl presentation 26.12.12“Identifying the Process and Measuring the Effective...
Sample MCQ Practice Questions on International Marketing (April 2014)
Sample MCQ Practice Questions on International Marketing (April 2014)
Risk management
Risk management
Chapter 7
Chapter 7
Gap analysis in banks
Gap analysis in banks
INTEREST RATE RISK
INTEREST RATE RISK
Bank lendings and loans ppt
Bank lendings and loans ppt
Banking ppt
Banking ppt
Asset Liability management in Banks
Asset Liability management in Banks
INTEREST RATE RISK MANAGEMENT IN BANKS
INTEREST RATE RISK MANAGEMENT IN BANKS
Semelhante a Chapter 6
Ratio analysiss
Ratio analysiss
Jason Spring
Chapter 7 (1) (2).ppt
Chapter 7 (1) (2).ppt
ssuser276544
Slide 1 12-1Cost of CapitalSlide 2.docx
Slide 1 12-1Cost of CapitalSlide 2.docx
edgar6wallace88877
JIGAR PPT.pptx
JIGAR PPT.pptx
NandishMehta3
Chap009.ppt
Chap009.ppt
Pony37
PPT BSBA Final project Finance
PPT BSBA Final project Finance
Accounting and Finance
Analytics that Work - Tools for Creating Value and Focusing Performance
Analytics that Work - Tools for Creating Value and Focusing Performance
National Pork Board
Strategic Management Ch02
Strategic Management Ch02
Chuong Nguyen
PPT2.pptx
PPT2.pptx
RiyaSingh536187
1Q 2016 Earnings Conference Call Presentation
1Q 2016 Earnings Conference Call Presentation
investors_principalfinancial
Mercer Capital's Bank Watch | June 2021 | Community Bank Valuation Financial ...
Mercer Capital's Bank Watch | June 2021 | Community Bank Valuation Financial ...
Mercer Capital
Ross7eCh01.ppt
Ross7eCh01.ppt
IndriatiFibria
Overview of Corporate Finance in India a presentation
Overview of Corporate Finance in India a presentation
footydigarse
Q3 presentation v4
Q3 presentation v4
Corning_Owens
Financial analisys Easton capitulo ROE.pptx
Financial analisys Easton capitulo ROE.pptx
JUANCARLOSRUBIOSEVIL
Financial management
Financial management
DevTech Finance
Q3 presentation v5
Q3 presentation v5
Corning_Owens
CFA-EBook.pdf
CFA-EBook.pdf
johnElis1
LendingClub Stockholder Outreach 2019 Presentation
LendingClub Stockholder Outreach 2019 Presentation
Tearsheet
Chap003.ppt
Chap003.ppt
ArunavaBandyopadhyay6
Semelhante a Chapter 6
(20)
Ratio analysiss
Ratio analysiss
Chapter 7 (1) (2).ppt
Chapter 7 (1) (2).ppt
Slide 1 12-1Cost of CapitalSlide 2.docx
Slide 1 12-1Cost of CapitalSlide 2.docx
JIGAR PPT.pptx
JIGAR PPT.pptx
Chap009.ppt
Chap009.ppt
PPT BSBA Final project Finance
PPT BSBA Final project Finance
Analytics that Work - Tools for Creating Value and Focusing Performance
Analytics that Work - Tools for Creating Value and Focusing Performance
Strategic Management Ch02
Strategic Management Ch02
PPT2.pptx
PPT2.pptx
1Q 2016 Earnings Conference Call Presentation
1Q 2016 Earnings Conference Call Presentation
Mercer Capital's Bank Watch | June 2021 | Community Bank Valuation Financial ...
Mercer Capital's Bank Watch | June 2021 | Community Bank Valuation Financial ...
Ross7eCh01.ppt
Ross7eCh01.ppt
Overview of Corporate Finance in India a presentation
Overview of Corporate Finance in India a presentation
Q3 presentation v4
Q3 presentation v4
Financial analisys Easton capitulo ROE.pptx
Financial analisys Easton capitulo ROE.pptx
Financial management
Financial management
Q3 presentation v5
Q3 presentation v5
CFA-EBook.pdf
CFA-EBook.pdf
LendingClub Stockholder Outreach 2019 Presentation
LendingClub Stockholder Outreach 2019 Presentation
Chap003.ppt
Chap003.ppt
Último
Economics Presentation-2.pdf xxjshshsjsjsjwjw
Economics Presentation-2.pdf xxjshshsjsjsjwjw
mordockmatt25
劳伦森大学毕业证
劳伦森大学毕业证
yyawb
fundamentals of corporate finance 11th canadian edition test bank.docx
fundamentals of corporate finance 11th canadian edition test bank.docx
ssuserf63bd7
Seeman_Fiintouch_LLP_Newsletter_May-2024.pdf
Seeman_Fiintouch_LLP_Newsletter_May-2024.pdf
Ashis Kumar Dey
Certified Kala Jadu, Black magic specialist in Rawalpindi and Bangali Amil ba...
Certified Kala Jadu, Black magic specialist in Rawalpindi and Bangali Amil ba...
batoole333
FE Credit and SMBC Acquisition Case Studies
FE Credit and SMBC Acquisition Case Studies
NghiaPham100
Explore Dual Citizenship in Africa | Citizenship Benefits & Requirements
Explore Dual Citizenship in Africa | Citizenship Benefits & Requirements
marketingkingdomofku
cost-volume-profit analysis.ppt(managerial accounting).pptx
cost-volume-profit analysis.ppt(managerial accounting).pptx
azadalisthp2020i
Stock Market Brief Deck (Under Pressure).pdf
Stock Market Brief Deck (Under Pressure).pdf
Michael Silva
Bhubaneswar🌹Ravi Tailkes ❤CALL GIRLS 9777949614 💟 CALL GIRLS IN bhubaneswar ...
Bhubaneswar🌹Ravi Tailkes ❤CALL GIRLS 9777949614 💟 CALL GIRLS IN bhubaneswar ...
Call Girls Mumbai
Lion One Corporate Presentation May 2024
Lion One Corporate Presentation May 2024
Adnet Communications
abortion pills in Jeddah Saudi Arabia (+919707899604)cytotec pills in Riyadh
abortion pills in Jeddah Saudi Arabia (+919707899604)cytotec pills in Riyadh
samsungultra782445
Pension dashboards forum 1 May 2024 (1).pdf
Pension dashboards forum 1 May 2024 (1).pdf
Henry Tapper
Business Principles, Tools, and Techniques in Participating in Various Types...
Business Principles, Tools, and Techniques in Participating in Various Types...
jeffreytingson
Famous No1 Amil Baba Love marriage Astrologer Specialist Expert In Pakistan a...
Famous No1 Amil Baba Love marriage Astrologer Specialist Expert In Pakistan a...
janibaber266
Webinar on E-Invoicing for Fintech Belgium
Webinar on E-Invoicing for Fintech Belgium
FinTech Belgium
20240419-SMC-submission-Annual-Superannuation-Performance-Test-–-design-optio...
20240419-SMC-submission-Annual-Superannuation-Performance-Test-–-design-optio...
Henry Tapper
Abortion pills in Saudi Arabia (+919707899604)cytotec pills in dammam
Abortion pills in Saudi Arabia (+919707899604)cytotec pills in dammam
samsungultra782445
Black magic specialist in Canada (Kala ilam specialist in UK) Bangali Amil ba...
Black magic specialist in Canada (Kala ilam specialist in UK) Bangali Amil ba...
batoole333
Avoidable Errors in Payroll Compliance for Payroll Services Providers - Globu...
Avoidable Errors in Payroll Compliance for Payroll Services Providers - Globu...
globusfinanza
Último
(20)
Economics Presentation-2.pdf xxjshshsjsjsjwjw
Economics Presentation-2.pdf xxjshshsjsjsjwjw
劳伦森大学毕业证
劳伦森大学毕业证
fundamentals of corporate finance 11th canadian edition test bank.docx
fundamentals of corporate finance 11th canadian edition test bank.docx
Seeman_Fiintouch_LLP_Newsletter_May-2024.pdf
Seeman_Fiintouch_LLP_Newsletter_May-2024.pdf
Certified Kala Jadu, Black magic specialist in Rawalpindi and Bangali Amil ba...
Certified Kala Jadu, Black magic specialist in Rawalpindi and Bangali Amil ba...
FE Credit and SMBC Acquisition Case Studies
FE Credit and SMBC Acquisition Case Studies
Explore Dual Citizenship in Africa | Citizenship Benefits & Requirements
Explore Dual Citizenship in Africa | Citizenship Benefits & Requirements
cost-volume-profit analysis.ppt(managerial accounting).pptx
cost-volume-profit analysis.ppt(managerial accounting).pptx
Stock Market Brief Deck (Under Pressure).pdf
Stock Market Brief Deck (Under Pressure).pdf
Bhubaneswar🌹Ravi Tailkes ❤CALL GIRLS 9777949614 💟 CALL GIRLS IN bhubaneswar ...
Bhubaneswar🌹Ravi Tailkes ❤CALL GIRLS 9777949614 💟 CALL GIRLS IN bhubaneswar ...
Lion One Corporate Presentation May 2024
Lion One Corporate Presentation May 2024
abortion pills in Jeddah Saudi Arabia (+919707899604)cytotec pills in Riyadh
abortion pills in Jeddah Saudi Arabia (+919707899604)cytotec pills in Riyadh
Pension dashboards forum 1 May 2024 (1).pdf
Pension dashboards forum 1 May 2024 (1).pdf
Business Principles, Tools, and Techniques in Participating in Various Types...
Business Principles, Tools, and Techniques in Participating in Various Types...
Famous No1 Amil Baba Love marriage Astrologer Specialist Expert In Pakistan a...
Famous No1 Amil Baba Love marriage Astrologer Specialist Expert In Pakistan a...
Webinar on E-Invoicing for Fintech Belgium
Webinar on E-Invoicing for Fintech Belgium
20240419-SMC-submission-Annual-Superannuation-Performance-Test-–-design-optio...
20240419-SMC-submission-Annual-Superannuation-Performance-Test-–-design-optio...
Abortion pills in Saudi Arabia (+919707899604)cytotec pills in dammam
Abortion pills in Saudi Arabia (+919707899604)cytotec pills in dammam
Black magic specialist in Canada (Kala ilam specialist in UK) Bangali Amil ba...
Black magic specialist in Canada (Kala ilam specialist in UK) Bangali Amil ba...
Avoidable Errors in Payroll Compliance for Payroll Services Providers - Globu...
Avoidable Errors in Payroll Compliance for Payroll Services Providers - Globu...
Chapter 6
1.
McGraw-Hill/Irwin Copyright ©
2013 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter Six Measuring and Evaluating the Performance of Banks and Their Principal Competitors
2.
McGraw-Hill/Irwin Bank Management and
Financial Services, 7/e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. 6-2 Key Topics • Stock Values and Profitability Ratios • Measuring Credit, Liquidity, and Other Risks • Measuring Operating Efficiency • Performance of Competing Financial Firms • Size and Location Effects • Appendix: Using Financial Ratios and Other Analytical Tools to Track Financial Firm Performance – The UBPR and BHCPR
3.
McGraw-Hill/Irwin Bank Management and
Financial Services, 7/e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. 6-3 Introduction • This chapter focuses on the most widely used indicators of the quality and quantity of bank performance and their principal competitors • Focus on the most important dimensions of performance – profitability and risk • Financial institutions are simply businesses organized to maximize the value of the shareholders’ wealth invested in the firm at an acceptable level of risk • Must continually be on the lookout for new opportunities for revenue growth, greater efficiency, and more effective planning and control
4.
McGraw-Hill/Irwin Bank Management and
Financial Services, 7/e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. 6-4 Evaluating Performance • Performance must be directed toward specific objectives • A fair evaluation of any financial firm’s performance should start by evaluating whether it has been able to achieve the objectives its management and stockholders have chosen • A key objective is to maximize the value of the firm
5.
McGraw-Hill/Irwin Bank Management and
Financial Services, 7/e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. 6-5 Evaluating Performance (continued) • The minimum acceptable rate of return, r, is sometimes referred to as an institution’s cost of capital ▫ Two main components ▫ The risk-free rate of interest ▫ The equity risk premium • The value of the financial firm’s stock will tend to rise in any of the following situations 1. The value of the stream of future stockholder dividends is expected to increase 2. The financial organization’s perceived level of risk falls 3. Market interest rates decrease, reducing shareholders’ acceptable rates of return via the risk-free rate of interest component of all market interest rates 4. Expected dividend increases are combined with declining risk, as perceived by investors
6.
McGraw-Hill/Irwin Bank Management and
Financial Services, 7/e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. 6-6 Evaluating Performance (continued) • The stock values of financial institutions are sensitive to changes in market interest rates, currency exchange rates, and the strength or weakness of the economy • Equation (6–1) assumes that the stock may pay dividends of varying amounts over time • If the dividends paid to stockholders are expected to grow at a constant rate over time, perhaps reflecting steady growth in earnings, the stock price equation can be greatly simplified into ▫ D1 is the expected dividend in period 1 ▫ r is the rate of discount reflecting the perceived level of risk ▫ g is the expected constant growth rate at which all future stock dividends will grow each year
7.
McGraw-Hill/Irwin Bank Management and
Financial Services, 7/e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. 6-7 Evaluating Performance (continued) • The previous two stock price formulas assume the financial firm will pay dividends indefinitely into the future • Most capital market investors have a limited time horizon ▫ where we assume an investor will hold the stock for n periods, receiving the stream of dividends D1, D2, . . . , Dn and sell the stock for price Pn at the end of the planned investment horizon
8.
McGraw-Hill/Irwin Bank Management and
Financial Services, 7/e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. 6-8 Evaluating Performance (continued) • The behavior of a stock’s price is, in theory, the best indicator of a financial firm’s performance because it reflects the market’s evaluation of that firm • This indicator is often not available for smaller banks and other relatively small financial-service corporations • Key Profitability Ratios
9.
McGraw-Hill/Irwin Bank Management and
Financial Services, 7/e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. 6-9 Evaluating Performance (continued)
10.
McGraw-Hill/Irwin Bank Management and
Financial Services, 7/e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. 6-10 Evaluating Performance (continued) • Return on assets (ROA) is primarily an indicator of managerial efficiency ▫ Indicates how capable management has been in converting assets into net earnings • Return on equity (ROE) is a measure of the rate of return flowing to shareholders • Approximates the net benefit that the stockholders have received from investing their capital in the financial firm • The net operating margin, net interest margin, and net noninterest margin are efficiency measures as well as profitability measures ▫ The net interest margin measures how large a spread between interest revenues and interest costs management has been able to achieve ▫ The net noninterest margin measures the amount of noninterest revenues stemming from service fees the financial firm has been able to collect relative to the amount of noninterest costs incurred ▫ Typically, the net noninterest margin is negative
11.
McGraw-Hill/Irwin Bank Management and
Financial Services, 7/e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. 6-11 Evaluating Performance (continued) • Another traditional measure of earnings efficiency is the earnings spread ▫ Measures the effectiveness of a financial firm’s intermediation function in borrowing and lending money and also the intensity of competition in the firm’s market area ▫ Greater competition tends to squeeze the difference between average asset yields and average liability costs ▫ If other factors are held constant, the spread will decline as competition increases
12.
McGraw-Hill/Irwin Bank Management and
Financial Services, 7/e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. 6-12 Evaluating Performance (continued) • Useful Profitability Formulas for Banks and Other Financial- Service Companies
13.
McGraw-Hill/Irwin Bank Management and
Financial Services, 7/e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. 6-13 Evaluating Performance (continued) or where
14.
McGraw-Hill/Irwin Bank Management and
Financial Services, 7/e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. 6-14 EXHIBIT 6–1 Elements That Determine the Rate of Return Earned on the Stockholders’ Investment (ROE) in a Financial Firm
15.
McGraw-Hill/Irwin Bank Management and
Financial Services, 7/e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. 6-15 TABLE 6–1 Components of Return on Equity (ROE) for All FDIC-Insured Institutions (1992-2009)
16.
McGraw-Hill/Irwin Bank Management and
Financial Services, 7/e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. 6-16 Evaluating Performance (continued) • A slight variation of the simple ROE model produces an efficiency equation useful for diagnosing problems in four different areas in the management of financial-service firms or
17.
McGraw-Hill/Irwin Bank Management and
Financial Services, 7/e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. 6-17 Evaluating Performance (continued) • We can also divide a financial firm’s return on assets into its component parts
18.
McGraw-Hill/Irwin Bank Management and
Financial Services, 7/e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. 6-18 TABLE 6–2 Calculating Return on Assets (ROA)
19.
McGraw-Hill/Irwin Bank Management and
Financial Services, 7/e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. 6-19 TABLE 6–3 Components of Return on Assets (ROA) for All FDIC-Insured Depository Institutions (1992–2009)
20.
McGraw-Hill/Irwin Bank Management and
Financial Services, 7/e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. 6-20 Evaluating Performance (continued) • Achieving superior profitability for a financial institution depends upon several crucial factors 1. Careful use of financial leverage (or the proportion of assets financed by debt as opposed to equity capital) 2. Careful use of operating leverage from fixed assets (or the proportion of fixed-cost inputs used to boost operating earnings as output grows) 3. Careful control of operating expenses so that more dollars of sales revenue become net income 4. Careful management of the asset portfolio to meet liquidity needs while seeking the highest returns from any assets acquired 5. Careful control of exposure to risk so that losses don’t overwhelm income and equity capital
21.
McGraw-Hill/Irwin Bank Management and
Financial Services, 7/e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. 6-21 Evaluating Performance (continued) • Risk to the manager of a financial institution or to a regulator supervising financial institutions means the perceived uncertainty associated with a particular event • Among the more popular measures of overall risk for a financial firm are the following ▫ Standard deviation (σ) or variance (σ2 ) of stock prices ▫ Standard deviation or variance of net income ▫ Standard deviation or variance of return on equity (ROE) and return on assets (ROA) • The higher the standard deviation or variance of the above measures, the greater the overall risk
22.
McGraw-Hill/Irwin Bank Management and
Financial Services, 7/e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. 6-22 Evaluating Performance (continued) • Bank Risks ▫ Credit Risk ▫ Liquidity Risk ▫ Market Risk ▫ Interest Rate Risk ▫ Operational Risk ▫ Legal and Compliance Risk ▫ Reputation Risk ▫ Strategic Risk ▫ Capital Risk
23.
McGraw-Hill/Irwin Bank Management and
Financial Services, 7/e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. 6-23 Evaluating Performance (continued) • Other Goals in Banking and Financial-Services Management ▫ A rise in the value of the operating efficiency ratio often indicates an expense control problem or a falloff in revenues, perhaps due to declining market demand ▫ In contrast, a rise in the employee productivity ratio suggests management and staff are generating more operating revenue and/or reducing operating expenses per employee, helping to squeeze out more product with a given employee base
24.
McGraw-Hill/Irwin Bank Management and
Financial Services, 7/e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. 6-24 Performance Indicators among Banking’s Key Competitors • Among the key bank performance indicators that often are equally applicable to privately owned, profit-making nonbank financial firms are Prices on common and preferred stock Return on equity capital (ROE) Return on assets (ROA) Net operating margin Net interest margin Equity multiplier Asset utilization ratio Cash accounts to total assets Nonperforming assets to equity capital Interest-sensitive assets to interest- ratio sensitive liabilities Book-value assets to market-value assets Equity capital to risk-exposed assets Interest-rate spread between yields on Earnings per share of stock the financial firm’s debt and market yields on government securities
25.
McGraw-Hill/Irwin Bank Management and
Financial Services, 7/e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. 6-25 The Impact of Size on Performance • When the performance of one financial firm is compared to that of another, size becomes a critical factor ▫ Size is often measured by total assets or, in the case of a depository institution, total deposits • Most performance ratios are highly sensitive to the size group in which a financial institution finds itself • The best performance comparison is to choose institutions of similar size serving the same market area • Also, compare financial institutions subject to similar regulations and regulatory agencies
26.
McGraw-Hill/Irwin Bank Management and
Financial Services, 7/e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. 6-26 TABLE 6–4 Important Performance Indicators Related to the Size and Location of FDIC-Insured Depository Institutions (2009)
27.
McGraw-Hill/Irwin Bank Management and
Financial Services, 7/e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. 6-27 Quick Quiz • What individuals or groups are likely to be interested in the banks’ level of profitability and exposure to risk? • What are the principal components of ROE, and what does each of the these components measure? • What are the most important components of ROA and what aspects of a financial institution’s performance do they reflect? • Why do the managers of financial firms often pay close attention today to the net interest margin and noninterest margin? To the earnings spread? • To what different kinds of risk are banks and their financial-service competitors subjected today? • What items on a bank’s balance sheet and income statement can be used to measure its risk exposure? To what other financial institutions do these risk measures seem to apply?
28.
McGraw-Hill/Irwin Bank Management and
Financial Services, 7/e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. 6-28 Appendix: Using Financial Ratios and Other Analytical Tools to Track Financial-Firm Performance – The UBPR and BHCPR • Compared to other financial institutions, more information is available about banks than any other type of financial firm • Through the cooperative effort of four federal banking agencies – the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, and the Office of the Comptroller of the Currency – the Uniform Bank Performance Report (UBPR) and the Bank Holding Company Performance Report (BHCPR) provide key information for financial analysts • The UBPR, which is sent quarterly to all federally supervised banks, reports each bank’s assets, liabilities, capital, revenues, and expenses, and the BHCPR is similar for BHCs • Web link for UBPR and BHCPR: www.ffiec.gov
Baixar agora