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efficiency measure, the credit risk measure, and the interest rate risk measure. The parameters measurements are obtained then compared to the set standard of measurement of the peer group PG.Profitability measureEvaluates how profitable the bank is. Used to give the indication whether the bank is a going concern in the future. The main ratios used to measure profitability levels include the return on equity (ROE) and return on assets (ROA). ROE = net income/average total equity = 15,438,000/169,077,000 =0.0913 x 100% = 9.13%The return on equity measure the percentage return on equity capital employed by the jpmorgan bank. The higher the ratio the better, comparing the ratio to PG, the ROE of jpmorgan bank is lower. This shows the bank is performance below the set standards.
To calculate the ROA, = net income/the average assets = 15,438,000/1,911,544,750 = 0.008 x 100% = 0.81. the ROA ratio measures the percentage return on each unit of dollar used to acquire the assets of jpmorgan bank. The higher the ratio the better. Comparing the above ratio tothe PG ratio, the performance of the jpmorgan bank is slightly low, it means the assets are not being utilized well to generate the maximum income.Liquidity riskIs the measure of ability of jpmorgan bank to meet its obligations as they fall due. The higher theliquid the bank is, the better because it will be in a position to meet all the customers’ demands. Itis obtained by taking total short term security divided by the total assets. Interest rate riskIs risk associated with the fluctuation of interest rates, which in turn affects the interest income ofthe bank from the interest-bearing instruments. Comparing the interest income and interest income of jpmorgan chase bank, the income interest is higher than the interest expense, meaning that the performance is good, the interest expenses is wholly covered by the interest income. When compared to peer group, the jpmorgan bank is the best performing bank, based on the interest rates.Capital riskIs the risk that the bank capital requirement might fall below the required reserve ratio. The ratio can be calculated as = total equity capital/total assets. Comparing the capitalization of the jpmorgan chase bank, the tier one leverage ratio of the equity to debt is large enough, meaning that the bank is performing well, the bank does not depend heavily on debt financing
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Financial Ratio, Chase, JPMorgan Chase, jpmorgan bank