Analysis of Skye bank’s 2013 FY Financial statement
RATIO ANALYSIS
- Liquidity Performance
- Liquid asset to deposit ratio: liquid asset/customer deposit and short term borrowed funds. This ratio indicates the percentage of short term obligations that could be met with the bank’s liquid assets in the case of sudden withdrawals.
| 2013 N’million | 2012 N’million | |
| Liquid asset to deposit borrowing ratio | 295,291.00 | 214,559.00 |
| 819,879.00 | 789,589.00 | |
| 36% | 27% |
Derivation of Liquid Assets and Customer deposit & short term borrowed funds
| Liquid Assets : | 2013 N’million | 2012 N’million |
| Cash and bank with CBN | 142,698.00 | 109,987.00 |
| Cash due from other financial institutions | 148,267.00 | 95,874.00 |
| Trading Securities | 617.00 | 2,264.00 |
| Available for sale securities | 3,709.00 | 6,434.00 |
| 295,291.00 | 214,559.00 |
| Customer deposit and short term borrowed funds: | 2013 N’million | 2012 N’million |
| Customer deposits & other deposits | 819,736.00 | 786960 |
| Due to other financial institutions | 2,629.00 | 143.00 |
| 819,879.00 | 789,589.00 |
- Net loans to total asset ratio: Net loans/total assets
NLTA measures the percentage of assets that is tied up in loans. The higher the ratio, the less liquid the bank is.
| 2013 N’million | 2012 N’million | |
| Net Loans to total asset ratio | 457,414.00 | 460,537.00 |
| 1,114,009.00 | 1,071,311.00 | |
| 41% | 43% |
| Derivation of net loans | ||
| Loans and receivables from customers | 551,328.00 | 540,036.00 |
| Loans and receivable securities | 42,771.00 | 34,709.00 |
| Borrowings from foreign and local Banks | (136,685.00) | (114,208.00) |
| 457,414.00 | 460,537.00 |
- Net loans to deposit & borrowing: Net loans/total deposits and short term borrowings. This ratio indicates the percentage of the total deposits
locked into non-liquid assets. A high figure denotes lower liquidity
| 2013 N’million | 2012 N’million | |
| Net loans to deposit and borrowing | 457,414.00 | 460,537.00 |
| 819,879.00 | 789,589.00 | |
| 56% | 58% |
- Profitability Performance:
- Return on Assets: net profit/total assets
shows the ability of management to acquire deposits at a reasonable cost and invest them in profitable investments (Ahmed, 2009). This ratio indicates how much net income is
generated per £ of assets. The higher the ROA, the more the profitable the bank
| 2013 N’million | 2012 N’million | |
| Return on assets: | 15,865.00 | 12,697.00 |
| 1,114,009.00 | 1,071,311.00 | |
| 1.42% | 1.19% | |
- Return on Equity: net profit/ total equity.
ROE is the most important indicator of a bank’s profitability and growth potential. It is the rate of return to shareholders or the percentage return on each £ of equity invested in the bank.
| 2013 N’million | 2012 N’million | |
| Return on Equity: | 15,865.00 | 12,697.00 |
| 121,451.00 | 108,088.00 | |
| 13.06% | 11.75% |
- Cost to income ratio: total cost /total income
measures the income generated per £ cost. That is how expensive it is for the bank to produce a unit of output. The lower the C/I ratio, the better the performance of the bank
| 2013 N’million | 2012 N’million | |
| C/I Ratio: | 64,335.00 | 55,548.00 |
| 80,200.00 | 68,245.00 | |
| 80% | 81% |
| Derivation of total cost | 2013 N’million | 2012 N’million |
| Operating expenses | 50,465.00 | 39,370.00 |
| Impairment charges | 12,677.00 | 13,100.00 |
| Tax expenses | 1,193.00 | 3,078.00 |
| 64,335.00 | 55,548.00 |
| Derivation of Income | 2013 N’million | 2012 N’million |
| Net interest income | 61,209.00 | 44,071.00 |
| Net fees and commission | 17,029.00 | 13,100.00 |
| Other Income | 1,193.00 | 3,078.00 |
| 80,200.00 | 68,245.00 | |
Asset credit quality:
- Loan loss reserve to gross loans: Loan loss reserve/gross loans.
This ratio indicates the proportion of the total portfolio that has been set aside but not charged off. It is a reserve for losses expressed as a percentage of total loans
| Loan loss reserve to gross loans | 2013 N’million | 2012 N’million |
| 13,285.58 | 12,861.22 | |
| 594,099.00 | 574,745.00 | |
| 2.236% | 2.238% |
| Derivation of loan loss reserve | 2013 N’million | 2012 N’million |
| 2 % Performing loans (2% of 576554 for 2013) & (2% of 557666) for 2012 | 11,531.08 | 11,153.32 |
| 10% non performing loans (10% of 17545 for 2013) / (10% of 17079 for 2012) | 1,754.50 | 1,707.90 |
| 13,285.58 | 12,861.22 |
- Non performing loans to total gross loans : Non performing loans/ total gross loans
| 2013 N’million | 2012 N’million | |
| Non performing loans to total gross loan | 17,545.00 | 17,079.00 |
| 594,099.00 | 574,745.00 | |
| 3.04% | 3.0% |
- Capital Adequacy Ratio:
Shareholder’s equity to total asset: Shareholder’s equity/ Total assets
| 2013 N’million | 2012 N’million | |
| Shareholder’s equity to total assets | 121,451.00 | 108,088.00 |
| 1,114,009.00 | 1,071,131.00 | |
| 10.90% | 10.09% |
SUMMARY OF KEY ACCOUNTING RATIOS
| 2013 | 2012 | Comment | |
| Liquid asset to deposit borrowing ratio | 36% | 27% | Improves |
| Net loans to total asset ratio | 41% | 43% | Improves |
| Net loans to deposit & borrowing | 56% | 58% | Improves |
| Profitability Performance | |||
| Return on assets | 1.42% | 1.19% | Improves |
| Return on equity | 13.06% | 11.75% | Improves |
| Cost to Income Ratio | 80% | 81% | Improves |
| Asset Credit Quality | |||
| Loan loss reserve to gross loans | 2.236% | 2.237% | Improves |
| Non performing loans to total gross loans | 3.04% | 3% | DeclineS |
| Capital Adequacy Ratio | |||
| Shareholder’s equity to total assets | 10.9% | 10.09% | Improves |
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