商业银行学答案第八版罗斯Chap006Word下载.docx

1、Chapter OutlineI. Introduction: II Evaluating PerformanceA. Determining Long-Range ObjectivesB. Maximizing the Value of the Firm: A Key Objective for Nearly All Financial-Service InstitutionsC. Profitability Ratios: A Surrogate for Stock Values1. Key Profitability Ratios2. Interpreting Profitability

2、 Ratios D. Useful Profitability Formulas for Banks and Other Financial-Service CompaniesE. Return on Equity and Its Principal ComponentsF. The Return on Assets and Its Principal Components G. What a Breakdown of Profitability Measures Can Tell UsH. Measuring Risk in Banking and Financial Services1.

3、Credit Risk2. Liquidity Risk3. Market Risk4. Price Risk5. Interest Rate Risk6. Foreign Exchange and Sovereign Risk7. Off-Balance-Sheet Risk8. Operational （Transactional） Risk9. Legal and Compliance Risks 10 Reputation Risk11. Strategic Risk12. Capital RiskI. Other Goals in Banking and Financial-Serv

4、ices ManagementIII. Performance Indicators among Bankings Key CompetitorsIV.The Impact of Size on Performance A. Size, Location and Regulatory Bias in Analyzing the Performance of Banks and Competing Financial Institutions V. Summary of the ChapterAppendix to the Chapter - Using Financial Ratios and

5、 Other Analytical Tools to Track Financial-Firm Performance-The UBPR and BHCPRConcept Checks6-1. Why should banks and other corporate financial firms be concerned about their level of profitability and exposure to risk?Banks in the U.S. and most other countries are private businesses that must attra

6、ct capital from the public to fund their operations. If profits are inadequate or if risk is excessive, they will have greater difficulty in obtaining capital and their funding costs will grow, eroding profitability. Bank stockholders, depositors, and bank examiners representing the regulatory commu

7、nity are all interested in the quality of bank performance. The stockholders are primarily concerned with profitability as a key factor in determining their total return from holding bank stock, while depositors （especially large corporate depositors） and examiners typically focus on bank risk expos

8、ure.6-2. What individuals or groups are likely to be interested in these dimensions of performance for a financial institution?The individuals or groups likely to be interested in the dimensions i.e., Bank profitability and Risk are Other banks lending to a particular bank, borrowers, large deposito

9、rs, holders of long-term debt capital issued by banks, bank stockholders, and the regulatory community.6-3. What factors influence the stock price of a financial-services corporation?A banks stock price is affected by all those factors affecting its profitability and risk exposure, particularly its

10、rate of return on equity capital and risk to shareholder earnings. Research evidence over the years has found that the stock prices of financial institutions is sensitive to changes in market interest rates, currency exchange rates, and the strength or weakness of the economy. A bank can raise its s

11、tock price by creating an expectation in the minds of investors of greater earnings in the future, by lowering the banks perceived risk exposure, or by a combination of increases in expected earnings and reduced risk.6-4. Suppose that a bank is expected to pay an annual dividend of $4 per share on i

12、ts stock in the current period and dividends are expected to grow 5 percent a year every year, and the minimum required return-to-equity capital based on the banks perceived level of risk is 10 percent. Can you estimate the current value of the banks stock?In this constant dividend growth rate probl

13、em the current value of the banks stock would be:Po = D1 / （r g） = $4 / （0.10 0.05） = $80.6-5. What is return on equity capital, and what aspect of performance is it supposed to measure? Can you see how this performance measure might be useful to the managers of financial firms?Return on equity capi

14、tal is the ratio of Net Income/Total Equity Capital. It represents the rate of return earned on the funds invested in the bank by its stockholders. Financial firms have stockholders, who too are interested in the return on the funds that they invested.6-6 Suppose a bank reports that its net income f

15、or the current year is $51 million, its assets total $1,144 million, and its liabilities amount to $926 million. What is its return on equity capital? Is the ROE you have calculated good or bad? What information do you need to answer this last question?The banks return on equity capital should be:RO

16、E =Net Income =$51 million= 0.234 or 23.39 percentTotal equity Capital$1,144 mill.-$926 mill.In order to evaluate the performance of the bank, you have to compare the ROE to the ROE of some major competitors or some industry average.6-7 What is the return on assets （ROA）, and why is it important? Mi

17、ght the ROA measure be important to bankings key competitors?Return on assets is the ratio of Net Income/Total Assets. The rate of return secured on a banks total assets indicates the efficiency of its management in generating net income from all of the resources （assets） committed to the institutio

18、n. This would be important to banks and their major competitors.6-8. A bank estimates that its total revenues will amount to $155 million and its total expenses （including taxes） will equal $107 million this year. Its liabilities total $4,960 million while its equity capital amounts to $52 million.

19、What is the banks return on assets? Is this ROA high or low? How could you find out?s return on assets would be:ROA =Net Income$155 mill. - $107 mill.= 0.0096 or 0.96 percentTotal Assets$4,960 mill. + $52 mill.The size of this banks ROA should be compared with the ROAs of other banks similar in size

20、 and location to determine if this banks ROA is high or low.6-9. Why do the managers of financial firms often pay close attention today to the net interest margin and noninterest margin? To the earnings spread?The net interest margin （NIM） indicates how successful the bank has been in borrowing fund

21、s from the cheapest sources and in maintaining an adequate spread between its returns on loans and security investments and the cost of its borrowed funds. If the NIM rises, loan and security income must be rising or the average cost of funds must be falling or both. A declining NIM is undesirable b

22、ecause the banks interest spread is being squeezed, usually because of rising interest costs on deposits and other borrowings and increased competition today.In contrast, the noninterest margin reflects the banks spread between its noninterest income （such as service fees on deposits） and its nonint

23、erest expenses （especially salaries and wages and overhead expenses）. For most banks the noninterest margin is negative. Management will usually attempt to expand fee income, while controlling closely the growth of noninterest expenses in order to make a negative noninterest margin less negative.The

24、 earnings spread measures the effectiveness of the banks intermediation function of borrowing and lending money, which, of course, is the banks primary way of generating earnings. As competition increases, the spread between the average yields on assets and the average cost of liabilities will be sq

25、ueezed, forcing the banks management to search for alternative sources of income, such as fees from various services the bank offers.6-10. Suppose a banker tells you that his bank in the year just completed had total interest expenses on all borrowings of $12 million and noninterest expense of $5 mi

26、llion, while interest income from earning assets totaled $16 million and noninterest revenues totaled $2 million. Suppose further that assets amounted to $480 million, of which earning assets represented 85 percent of that total while total interest-bearing liabilities amounted to 75 percent of tota

27、l assets. See if you can determine this banks net interest and noninterest margins and its earnings base and earnings spread for the most recent year.s net interest and noninterest margins must be:Net Interest $16 mill. - $12 mill.Noninterest$2 mill. - $5 mill.Margin$480 mill.= 0.00833= -0.00625s ea

28、rnings spread and earnings base are:Earnings$16 mill.-$12 mill.Spread$480 mill * 0.85$480 mill. * 0.75= 0.0392= 0.03330.0059Earnings Base$480 mill. （$480 mill. * 0.15）0.85 or 85 percent6-11. What are the principal components of ROE, and what does each of these components measure?The principal compon

29、ents of ROE are:a. The net profit margin or net after-tax income to Total operating revenues which reflects the effectiveness of a banks expense control program and service pricing policies;b. The degree of asset utilization or ratio of Total operating revenues to Total assets which measures the effectiveness of managing the banks portfolio management policies, especially the mix and yield on assets; and,c. The equity multiplier or ratio of Total