Efficiency Ratio A. Calculate the efficiency ratios for Bank X and Bank Y and what can you conclude from the results obtained. B. By decomposing the ratio into its major components, clearly show the sources of the difference in the two banks’ efficiency ratios. Please summarise the results in a table format. C. What is(are) the major contributor(s) for the difference in the performance of the two banks as revealed by the results in (B) above?
Efficiency Ratio A. Calculate the efficiency ratios for Bank X and Bank Y and what can you conclude from the results obtained. B. By decomposing the ratio into its major components, clearly show the sources of the difference in the two banks’ efficiency ratios. Please summarise the results in a table format. C. What is(are) the major contributor(s) for the difference in the performance of the two banks as revealed by the results in (B) above?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Efficiency Ratio
A. Calculate the efficiency ratios for Bank X and Bank Y and what can you conclude from the
results obtained.
B. By decomposing the ratio into its major components, clearly show the sources of the
difference in the two banks’ efficiency ratios. Please summarise the results in a table
format.
C. What is(are) the major contributor(s) for the difference in the performance of the two banks
as revealed by the results in (B) above?
Transcribed Image Text:B
BALANCE SHEETS AS AT 31 DECEMBER:
(K' Million)
Assets
Balances with banks
Investment in securities
Total loans and advances
Allowance for Loan losses
Total earning assets
Notes and coins
Balances with BoZ
Other assets
Total assets
Liabilities and Shareholders' equity
Demand deposits
Savings deposits
Time deposits
Total deposits
Balances due to banks
Other borrowed funds
Total interest bearing liabilities
Non-interest bearing liabilities
Shareholders' equity
Total liabilities and shareholders' equity
C
BANK X
2021
D
2022
2,003
681
6,122
9,449
7,831 10,152
(339) (364)
15,617
19,918
686
696
1,598 2,894
1,624 2,894
19,525 26,401
10,111 12,230
1,717 2,350
3,663
4,563
15,491 19,144
0
1,325
1,633
16,816
20,777
1,477 3,479
1,233
2,145
19,525
26,401
E
F
BANK Y
2021
G
2022
9,218 7,917
4,768 4,780
6,927 8,091
(553) (470)
20,361 20,318
1,830
1,809
2,394 4,036
1,169 1,393
25,753 27,556
437
347
15,520 14,409
977
1,102
4,549
4,467
21,046 19,978
649
250
21,830 20,878
1,668
3,467
2,255
3,212
25,753 27,556
Transcribed Image Text:INCOME STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022
(K' Million)
Interest Income
Interest income from loans and advances
Interest income from investments in securities
Interest income from banks and financial institutions
Total Interest Income
Interest Expense
Interest expense paid on deposits
Interest expense paid to banks and financial institutions
Interest expense paid on other borrowed funds
Total Interest Expense
Operating Income (Total Revenue)
Interest Income
Non-interest income
Total Operating Income
Operating Expense
Interest expenses
Provision for loan losses
Non-interest expenses
Total Operating Expense
Profit before taxes (or Pre-tax Net Operating Income)
Taxes
Profit after taxes (or Net Income)
Balance Sheet
Income Statement
1,925
1,612
7
3,543
750
249
999
3,543
1,538
5,082
999
165
2,222
3,386
1,696
640
1,056
(+)
1,456
856
23
2,335
333
187
17
537
2,335
1,236
3,570
537
110
1,472
2,119
1,452
565
887
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