Answer – Matching Earnings Ratios of Banks
This is the answer for Quiz – Matching Earnings Ratios of Banks.
Cost/Income | Net Interest Margin | Net Interest Income / Total Revenue | Bank (1, 2, 3, 4) | |
A | 69% | 2.1% | 47% | Bank of America |
B | 53% | 7.3% | 102% | Banco Santander (Brazil) |
C | 60% | 1.6% | 91% | Nationwide |
D | 69% | 0.9% | 39% | Societe Generate |
A Global financial services company
- High cost/income ratios – Blend of high cost investment banking and low profits
- Strong margins due to dominance in high margin retail credit card and emerging market business
- Relatively low NII/TR due to diversity of other businesses and commission income
B Emerging market retail bank
- Low cost/income ratio – reflecting more the high margins than true cost efficiency
- High margins reflect higher risk environment
- High NII/TR is due to dominance of retail activities
C UK building society
- Average cost/income ratio due to large branch network and fine margins but simple model
- Low margins in competitive retail and low risk mortgage business
- High NII/TR as almost exclusively retail secured lender
D Global investment bank with substantial commercial banking activities
- Relatively high cost/income ratio due to structural rigidities and high-cost investment banking
- Low margins due to tough economic conditions and focus on wholesale banking
- Low NII/TR still reflects relatively low level of retail activity.
Collection of Guides
[pt_view id=”bcd3b2cq2d”]