比率分析ratio analysis

Ratio analysis

：

Ratio

analysis

is

a

useful

management

tool

that

will

improve

your

understanding

of

financial

results

and

trends

over

time,

and

provide

key

indicators

of

organizational

performance.

Managers

will

use

ratio

analysis

to

pinpoint

strengths

and

weaknesses

from which strategies and initiatives can be formed.

Reasons

to use financial ratio analysis:

The

main

advantage

of

FRA

is

its

ability

and

effectiveness

in

distinguishing

high

performance banks from others and the fact that FRA compensates for disparities and

controls

for

any

size

effect

on

the

financial

variables

being

studied

(Samad,

2004).

Additionally, financial ratios can be used to identify a bank’s specific strengt

hs and

weaknesses

as

well

as

providing

detailed

information

about

bank

profitability,

liquidity and credit quality policies (Hempel et al, 1994: Dietrich, 1996). FRA permits

a

historical

sketch

of

bank

returns

and

risks

which

Hempel

et

al,

(1994)

suggests

presents

an

opportunity

to

evaluate

the

past

performance

of

the

bank

which

is

an

important

step

for

planning

for

future

performance.

Although

accounting

data

in

financial statements is subject to manipulation and financial statements are backward

looking,

they

are

the

only

detailed

information

available

on

the

bank’s

overall

activities

(Sinkey,

2002).

Furthermore,

they

are

the

only

source

of

information

for

evaluating the management’s potential to generate satisfactory returns in future.

What ratio

is usually used in banking sector?

(

上学期老师给的那张有变量的纸

)

The retail banking industry includes those banks that provide direct services such

as checking accounts, savings accounts and investment accounts, along with loan

services,

to

individual

consumers.

However,

most

retail

banks

are,

in

fact, commercial

banks that

service

corporate

customers

as

well

as

individuals.

Retail banks and commercial banks typically operate separately from investment

banks, although the repeal of the Glass-Steagall Act legally allows banks to offer

both

commercial

banking

services

and

investment

banking

service.

The

retail

banking industry, like the banking industry overall, derives revenue from its loans

and services.

In the United States, the retail banking industry is divided into

the major money

center

banks,

with

the

big

four

being

Wells

Fargo,

JPMorgan

Chase,

Citigroup

and Bank of America, and then there are regional banks and thrifts. In analyzing

retail

banks,

investors

consider

profitability

measures

that

provide

performance

evaluation considered most applicable for the banking industry.

Net Interest Margin

Net

interest

margin

is

an

especially

important

indicator

in

evaluating

banks

because it reveals a bank’s net profit on interest

-earning assets, such as loans or

investment

securities.

Since

the

interest

earned

on

such

assets

is

a

primary

source of revenue for a bank, this metric is a good indicator of a bank's overall

profitability,

and

higher

margins

generally

indicate

a

more

profitable

bank.

A

number of factors can significantly impact net interest margin, including interest

rates

charged

by

the

bank

and

the

source

of

the

bank's

assets.

Net

interest

margin is calculated as the sum of interest and investment returns minus related

expenses; this amount is then divided by the average total of earning assets.

The Loan-to-Assets Ratio

The loan-to-assets ratio is another industry specific metric that can help investors

obtain

a

more

complete

analysis

of

a

bank's

operations.

Banks

that

have

a

relatively higher loan-to- assets ratio derive more of their income from loans and

investments,

while

banks

with

lower

levels

of

loans- to-assets

ratios

derive

a

relatively

larger

portion

of

their

total

incomes

from

more-diversified,

noninterest

earning

sources,

such

as

asset

management

or

trading.

Banks

with

lower

loan- to-assets ratios may fare better when interest rates are low or credit is tight.

They may also fare better during economic downturns.

The Return-on-Assets Ratio

The

return-on-assets

(ROA)

ratio

is

frequently

applied

to

banks

because

cash flow analysis is more difficult to accurately construct. The ratio is considered

an important profitability ratio, indicating the per-dollar profit a company earns on

its

assets.

Since

bank

assets

largely

consist

of

money

the

bank

loans,

the

per-dollar return is an important metric of bank management. The ROA ratio is a

company's net, after-tax income divided by its total assets. An important point to

note is since banks are highly leveraged, even a relatively low ROA of 1 to 2%

may represent substantial revenues and profit for a bank.

Loan/Deposit Ratio

The loan/deposit

ratio helps

assess

a

bank's

liquidity,

and

by

extension,

the

aggressiveness of the bank's management. If the loan/deposit ratio is too high, the

bank

could

be

vulnerable

to

any

sudden

adverse

changes

in

its

deposit

base.

Conversely,

if

the

loan/deposit

ratio

is

too

low,

the

bank

is

holding

on

to

unproductive capital and earning less than it should.

Efficiency Ratio

A bank's efficiency ratio is essentially equivalent to a regular company's operating

margin, in that it measures how much the bank pays on operating expenses, like

marketing and salaries. By and large, lower is better.

Capital Ratios

There

are

a

host

of

ratios

that

bank

regulators

andINVESTORS use

to

assess

how

risky

a

bank's

balance

sheet

is,

and

the

degree

to

which

the

bank

is

vulnerable

to

an

unexpected

increase

in

bad

loans.

A

bank's Tier

1

capital

ratio takes

a

bank's

equity

capital

and

disclosed

reserves

and

divides

it

by

the

bank's risk-weighted assets, (assets whose value is reduced by certain statutory

amounts, based upon its perceived riskiness).

The capital adequacy ratio is the sum of Tier 1 and Tier 2 capital, divided by the

sum

of

risk- weighted

assets.

The tangible

equity

ratio takes

the

bank's

equity,

subtracts

intangible

assets,

goodwill

and

preferred

STOCK equity,

and

then

divides it by the bank's tangible assets. Although not an especially popular ratio

prior to the 2007/2008 credit crisis, it does offer a good measure of the degree of

loss a bank can withstand, before wiping out shareholder equity.

Capital ratios can be thought of as proxies for a bank's margin of error. Nowadays,

capital ratios also play a larger role in determining whether regulators will sign off

on acquisitions and dividend payments.

Return On Equity / Return On Assets

（

ROA ROE

区别，与下面的问题也是相

关的）

Returns

on

equity

and

assets

are

well-established

metrics

long

used

in

fundamental

analysis

across

a

wide

range

of

industries.

Return

on

equity

is

especially useful in the valuation of banks, as traditional cash flow models can be

very

difficult

to

construct

forFINANCIAL

COMPANIES

,

and

return-on-equity

models can offer similar information.