III.

Analysis of bank performance:

1. Income statement:

To understand how well the bank is performing, the investors may look at its income statement. The
profitability of Shinhan bank, including operating income and operating expenses, is illustrated in the
following statement:

Overall, almost every factor was increased from 2018 to 2019. As operating income measures
the amount of profit in a business operation, it evaluates the bank operating performance. The
operating income of Shinhan bank rose from VND 4,206,538 (2018) to VND 5,359,463 (2019).
The 2019 data of operating income was approximately 1.27 times the data of that in 2018, which
means that the bank was doing well and on the way to development. Although the operating
expenses were also expanded from 2018 (VND 1,892,027) to 2019 (VND 2,202,543), the
operating profit before provision for credit losses was end up higher by a year.
4. Net interest margin and Net non-interest margin:
Net interest margin and net non-interest margin, which are profitability efficiency measures, act
as suitable tools for measuring how sucessful a firm is. It shows how effective a corporation
maintain the growth of revenues over rising expenses. However, one is for net interest factors
and the other is for net non-interest factors.
Net interest margin formula is designed to show how well a firm’s decisions of investment are:
Interest income−Interest expense
Net interest margin =
Toal assets
First, the gap between interest income and interest expense is calculated. Then it is devided by
total asset of the present year. Depending on the result of this ratio showing up as positive or
negative, the investors are assumed to make their investment decisions efficiently or not.
Coming to net non-interest margin, which measures revenues made from non-core activities by
the banks and financial institution such as loan processing fee, late payment fee, credit card
charges, etc. This ratio is a negative number.
Non−interest income−Provision for loan∧lease losses
Net non-interest margin =
Total assets
According to Shinhan bank’s 2019 annual report containing two years (2018-2019), total net
income in 2018 was VND 4,679,827 and VND 5,880,012 in 2019, coming with a slightly rise of
total interest expenses from VND 1,267,266 (2018) to VND 1,548,081 (2019). As illustrated by
the data, the calculation of net interest margin for both years can be easily carried out, which is
about 4.19% in 2018 and 4.07% in 2019. This means Shinhan bank was making progress of
performance throughout a year, also for its future development.
2018 2019
Total interest income 4,679,827 5,880,012
Total interest expenses 1,267,266 1,548,081
Total assets 83,808,578 103,430,671
Net interest margin 4.07% 4.19%