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Excel assignment:

Retrieving the necessary information from the Bank of Spain database, calculate and represent following indicator from 20
a)non-performing loans ratio (=doubtful debtors/loans)
b)Loans to total assets & deposits to total assets
c)loan to deposit ratio
d)”Deposits/ Employees” & “Deposits/Branches”
e) ROA and ROE
Note: The exercise is focused on loans and deposits of other resident sector
A brief and clear explanation of results for each section should be provided in a separate paper

Bank of Spain
2006 2007 2008 2009 2010
NPL 0.61% 0.70% 1.30% 3.28% 6.10%
LOAN TO TOTAL ASSETS 66.54% 67.93% 68.66% 66.17% 64.72%
DEPOSIT TO TOTAL ASSETS 65.92% 62.85% 64.00% 65.90% 66.48%
LTD 150% 155% 158% 152% 149%
DEPOSIT/EMPLOYEES 6.65 7.13 7.81 9.17 9.74
DEPOSIT/BRANCHES 40.21 44.27 47.61 56.02 59.35
ROE 19.80% 21.40% 17.70% 9.00% 9.50%
ROA 1.02% 1.11% 0.73% 0.54% 0.56%

HISTORICAL NON-PERFORMING LOANS IN SPAIN 2006-2016


8.00% 7.30%
7.00% 6.60%
6.10% 6.00%
6.00% 5.30%
4.55% 4.80%
5.00%
Percentage

4.00% 3.28%
3.00%
2.00% 1.30%
0.61% 0.70%
1.00%
0.00%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Years

LOANS TO TOTAL ASSETS RATIO IN SPAIN 2006-2016


70.00% 68.66%
67.93%
68.00%
66.54% 66.17%
66.00% 64.72% 64.45%
64.00%
Percentage

61.87%
62.00% 60.36% 60.62%
59.58%
60.00% 58.94%
58.00%
56.00%
54.00%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Years
61.87%

Percenta
62.00% 60.36% 60.62%
59.58%
60.00% 58.94%
58.00%
56.00%
54.00%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Years

DEPOSIT TO TOTAL ASSETS RATIO IN SPAIN 2006-2016


100.00%

80.00%
65.92% 62.85% 64.00% 65.90% 66.48%
58.79% 55.39%
60.00% 53.35% 54.87% 51.53% 50.11%
Percentage

40.00%

20.00%

0.00%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Years

loan-to-depos it (ltd) in spain 2006-2016


180%
155% 158%
160% 150% 152% 149% 150%
137%
140%
123% 119%
120% 114% 112%
100%
80%
60%
40%
20%
0%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

depos it/em ployees in spain 2006-2016


10 9.74
9.17
9 9.05 9.41
7.81 9.18 9.31 9.30
8 7.13 9.47
6.65
7
6
5
4
3
2
1
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
3
2
1
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

depos it/branch in s pain 2006-2016


70
60 56.02 59.35
55.85 58.18 59.17 60.45 63.55
50 47.61 60.58
40.21 44.27
40
30
20
10
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

BANK OF SPAIN ROE FOR 2006-2016


25.00%
21.40%
19.80%
20.00% 17.70%

15.00%
Percentage

9.00% 9.50%
10.00% 7.40% 7.80%
5.00% 4.40%
5.00% 2.80%

0.00% -3.00%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
-5.00%
Years

BANK OF SPAIN ROA FOR 2006-2016


1.20% 1.11%
1.02%
1.00%
0.80% 0.73%
0.54% 0.56%
0.60%
Percentage

0.44% 0.45% 0.45%


0.38%
0.40% 0.30%

0.20%
0.00% -0.17%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
-0.20%
-0.40%
Years
0.20%
0.00% -0.17%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
-0.20%
-0.40%
Years
epresent following indicator from 2006 to the latest data available:

te paper

2011 2012 2013 2014 2015 2016


4.55% 6.00% 6.60% 7.30% 4.80% 5.30%
64.45% 61.87% 58.94% 60.36% 60.62% 59.58%
58.79% 55.39% 53.35% 54.87% 51.53% 50.11%
150% 137% 123% 119% 114% 112%
9.05 9.41 9.18 9.31 9.30 9.47
55.85 58.18 59.17 60.45 60.58 63.55
7.40% -3.00% 7.80% 5.00% 4.40% 2.80%
0.44% -0.17% 0.45% 0.45% 0.38% 0.30%

Non-performing loans: A loan on which the borrower is not making interest


payments or repaying any principal. At what point the loan is classified as non-
performing by the bank, and when it becomes bad debt, depends on local
regulations. Due to the economic crisis in 2008 and further year, BDE recorded
greater bad-loans indexes, reaching its peak in 2014 (7.30%)

Loans to total assets: the ratio measures the percentage of assets that is tied
up in loans. The higher the ratio, the less liquid the bank is. Net Loans
represents total loans to customers, reduced by possible default losses and
unearned interest income. During 2008, banking system in Spain deployed
mostly of their assets as loans, but then constantly reduced the ratio by almost
10 pp.
Deposit to total assets: indicates the broad reliable base of funding for the
bank. This ratio establishes how much of the bank’s assets are funded by
deposits, rather than borrowed funds or equity. Despite a considerable
increase of this ratio during the first 5 years in study, it was followed by a
constant decrease after 2011, with the lowest level in 2016 (50.11%)

Loan-to-deposit ratio: The loan to deposit ratio is used to calculate a lending


institution's ability to cover withdrawals made by its customers. It is a
6 commonly used statistic for assessing a bank's liquidity. If the ratio is too high,
it means that the bank may not have enough liquidity to cover any unforeseen
fund requirements. Latest years have shown low level of LTD, indicating low
earnings for banks

112%

2016

Deposit/employees: This ratio reveals the deposit-collection capacity of an


employee. Also known as business per employee, it is a productivity ratio
6 which is measured by the quantity of output produced per employee. The
higher the deposit per employee ratio, higher the productivity per employee.

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6
6

Deposit/branches: Another ratio of productivity that takes into consideration


2016 for evaluation and comparison of the efficiency of a bank at its branch level.
The higher the ratio, the more is the business per branch and hence
greaterefficiency per branch. Branches in the Spaniard banking system include
deposit-taking institutions, official credit offices, CFI's and branches abroad.

55

Return on Equity (ROE): The return on equity is the return that investor earn
on their funds. For this purpose, the numerator consider the after-tax earnings
of the bank institutions while the denominator would be their equity. As show
in the chart, ROE in Spain has decrease considerably since its highest in 2007
(21.40%) to the deeper valley in 2012 (-3.00%)

Return on Assets (ROA): Like another profitability ratio, this is an indicator of


how profitable a company is relative to its total assets. Higher ROA also implies
more asset efficiency. Since most of total assets held by banking institution are
represented by loans, return on assets would be related the how profitable has
been those loans for banks. Both ROE and ROA level are expectd to be very
similar.

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