How to Calculate major ratios to evaluate a bank

Major Ratios to evaluate a bank are given hereunder (In response to queries of A student from Bhutan)

Ratios and method of Calculating the same
1-Net Interest Margin---
Total interest earned minus total interest paid divided by average interest earning assets

2-Cost Income Ratio ---
Operating Expenses Divided by (Non interest income plus interest spread)

3-Return on Average Assets-
Net Profit divided by AWF

4-Return on Assets
Net Profit divided by total assets

5-Cost of Deposit
Interest Paid on Deposits divided by Average Deposits

6-Capital Adequacy Ratio

Total Capital including Tier I plus Tier II multiplied by 100 and then this figure is divided by total Risk Weighted Assets of the Bank

7-Interest Spread/Average Working Funds(AWF)

(Total interest income minus total interest expenses) divided by AWF
Operation Expenses/AWF

8-Operating expenses divided by AWF

9-Return on Net Worth Net Profit Divided by NW
Dividend Payout Ratio Dividend including corporate dividend tax divided by 10-Net Profit

11-Credit Deposit Ratio
Total Advances divided by Customer Deposit(Total deposits minus inter bank deposits)

12-Net Profit/AWF

Net Profit divided by AWF

13-Interest Income/AWF

Total Interest income divided by AWF

14-Interest Expenses/AWF

Total interest expenses divided by AWF

15-Business per employee

Total Deposits plus total advances divided by No. of employees
Average
16-Business per employee

Average Deposits plus average advances divided by No. of employees
Net
17-Profit per employee


Net Profit divided by No. of employees

18-Net Profit per Branch

Net Profit divided by No. of branches
19-Earning per share

Net Profit divided by equity multiplied by Ten
20-Book Value per share

Net Worth (excluding Revaluation Reserve) divided by equity multiplied by Ten

• Average Working funds(AWF) - Fortnightly Average of Total Assets
• Average Deposits – Fortnightly Average of Total Deposits
• Average Advances – Fortnightly Average of Total Advances
• Average Business – Total of Average Deposits plus total of AverageAdvances