Banking 2

What are examples of internal performance indicators for banks?

Bank planning, technology, personnel development, and financial condition.

What are examples of external performance indicators for banks?

Market share, regulatory compliance, and public/investor confidence.

What are the four main components of a bank’s financial statements?

Balance sheet, income statement, statement of changes in equity, and cash flow statement.

What does the balance sheet show?

The bank’s financial state at a point in time, including assets, liabilities, and equity.

What does the income statement show?

A bank’s revenues and expenses over a period, showing net income.

What is ROE (Return on Equity)?

Operating profit after taxes divided by shareholders’ funds.

What is ROA (Return on Assets)?

Net income divided by total assets.

What does the leverage multiplier measure?

Total assets divided by equity; measures financial leverage.

What are the components of the DuPont ROE model?

ROE = Net Profit Margin × Asset Utilisation × Leverage Multiplier.

What does Net Profit Margin measure in DuPont?

Net income divided by revenue; measures cost control efficiency.

What does Asset Utilisation measure in DuPont?

Revenue divided by total assets; measures asset productivity.

What types of supplementary data are used in performance analysis?

Off-balance sheet data, credit ratings, share market indicators, non-financial factors.

Why is qualitative information important in bank performance?

It validates financial analysis and reflects non-financial performance such as management quality.