FI UBL.docx - Analysis of Financial Statement Assignment FI UBL Capital adequacy ratio Ratios Net interest margin Revenue per employee Net income per

FI UBL.docx - Analysis of Financial Statement Assignment FI...

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Analysis of Financial Statement Assignment FI: UBL 2014 2015 2016 2017 2018 2019 Capital adequacy ratio 13.9% 14.6% 15.1% 15.4% 17.7% 18.9 Ratios 2018 (RS in ‘000) 2019 (RS in ‘000) Net interest margin 56,234,271 / 113,198,299 = 49.6% 61,774,496 / 153,676,364 = 40.1% Revenue per employee 81,245,642 / 13,931 = 5,832 83,450,827 / 13,248 = 6,299 Net income per employee 15,226,095 / 13,931 = 1,093 19,133,774 / 13,248 = 1,444 Analysis: The Capital Adequacy Ratio (CAR) is divided into two tiers. Tier 1 is the amount of loss a bank can absorb without ceasing its operations and tier 2 is the amount of loss a bank can absorb when it is being liquidate. CAR is the ratio of a bank's capital in relation to its risk weighted assets and current liabilities. It prevent banks from taking excessive risk and leverage. The minimum capital adequacy range stated by State bank of Pakistan is from 8-10%. UBL CAR have been constantly increasing from last six years from 13.9% in 2014 to 18.9% in 2019. The ratio shows a good and positive sign for the bank as the bank can absorb sufficient amount of loss before being forced to cease its operation or at time of liquidating.
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  • Spring '20
  • Ratio, Capital requirement, Tier 1 capital, Capital adequacy ratio

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