Bank performance

Theories on bank profitability

From this ratio, we are able to determine the level of protection depositors have in the event of the bank winding-up. Generally, the more a bank invests in long-term assets, like long-term loans, the less they are able to meet unforeseen deposit withdrawals. The Grameen Bank's success as a bank is only sustainable if it is institutionally, economically and financially viable, and also if it generates sustainable benefits to borrowers that help reduce poverty. Our contention here is that a large bank is much more difficult and challenging to run than a small one. We rank banks according to the volume of assets they own. The higher the ratio, the higher the level of protection available to depositors since the bank is able to absorb a greater level of unexpected losses before becoming insolvent. Successful replications would depend not only on subsidized resources initially, but also on committed and dynamic leadership that is able to carve out market niches. A high level of profitability is desirable, especially in relation to other peer banks, as it is best regarded as earnings generated in relation to the resources invested in the bank. The provisions are specific to the individual loans.

If the provisions suck up the entire operating income, meaning it is at per cent and over, the bank is in trouble. One can associate consistent increment in profits with stability.

how to evaluate bank performance

Average Cost of Funds The ability of the bank to acquire external funding cheaply to boost its investments is a critical measure. Subsidized funds and grants were instrumental for outreach and institutional development of the Grameen Bank.

theories on bank performance

A high level of profitability is desirable, especially in relation to other peer banks, as it is best regarded as earnings generated in relation to the resources invested in the bank.

Using core capital at the end of the year would be unfair for banks that receive a capital injection on the very last day of the year because we would be assuming that that capital is what they started with at the beginning of the year.

The provisions are specific to the individual loans.

Determinants of bank performance

It reflects the ease with which a bank is able to secure such funds. Total Assets Here, we assess the cumulative asset portfolio owned by banks. It has over two million members spread over 35, villages, 94 percent of whom are women. This is a modification from our previous assessment where we used total assets at the end of the financial year to calculate this ration. But banks generally fail because of bad loans. The Grameen Bank's achievements has led to its many replications in over forty countries and the World Bank has taken the initiative to sponsor Grameen-type schemes. If the provisions suck up the entire operating income, meaning it is at per cent and over, the bank is in trouble. The Grameen Bank's success as a bank is only sustainable if it is institutionally, economically and financially viable, and also if it generates sustainable benefits to borrowers that help reduce poverty. Bank Performance Rankings Overall Bank Ranking Report These bank rankings are compiled from the financial statements issued by the banks at the end of the year as required by the Central Bank of Kenya.

But banks generally fail because of bad loans. The paper discusses what the Grameen Bank is, what it does for the rural poor and at what costs, its sustainability as well as its potential for expansion and replicability.

A lower rate is desirable.

bank performance analysis

A low ratio is therefore desirable. We rank banks according to the volume of assets they own.

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Analyzing Bank Performance