CASE STUDY -3

Balance sheet of xyz bank as on 31st March 2010 ( amount in Rs. 000)
Liabilities (Resources) Share capital Reserves 3000 6000 3% 6% 28% 30% 30% 3% Assets (uses) Cash 2900 3% 4% 30% 20% 20% 20% 3% 100

Money at call and 4000 short notice Investments Loans and advances Bills discounted Term Loans Fixed assets 30000 20000 20000 20000 3100 100000

Current Deposits 28000 Savings deposits 30000 Time deposits Borrowings 30000 3000

100000

100

Profit & Loss of XYZ bank for year ended March, 2010
Expenses Interest paid on deposits Interest paid on borrowings Operating expenses Total Operating Profit Tax paid Net profit Income 3600 Interest on investments 120 Interest on loan and advances 1900 5000 50

2000 Non interest Income 5720 1230 400 830 Total

6950

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Calculation of interest income
Assets Cash balance Money at call and short notice Investments Loans and advances Bills discounted Term Loans Fixed assets Total Interest Income Amount 2900 4000 30000 20000 20000 20000 3100 NA 6900 Average Yield NA Income

200 1500 1800 1600 1800

Calculation of interest cost
Liabilities Share capital Reserves Current Deposits Savings deposits Time deposits Borrowings Total interest paid Amount 3000 6000 28000 30000 30000 3000 Average Cost NA NA 0% 1050 2550 120 3720 Expenses

Note: Please make provisions for the followings:(a) Bank has to provide Rs.30,000/- as provision for loan losses

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(b) Board of directors have proposed a dividend of 10% to equity share holders Calculate 1. Spread 2. Burden 3. Net operating income 4. Profit before tax 5. Profit after tax 6. Retained profit 7. % of CASA deposits 8. % of earning assets 9. Profit margin 10.Gross yield 11.Average yield on advances 12.Average cost of deposits 13.Net interest margin 14.Returns on assets 15.Returns of equity 16.Financial leverage

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