Return On Equity - ROE

The amount of net income returned as a percentage of shareholders equity. Return on equity measures
a corporation's profitability by revealing how much profit a company generates with the money
shareholders have invested.

ROE is expressed as a percentage and calculated as:

Return on Equity = Net Income/Shareholder's Equity

Return on Assets - ROA

An indicator of how profitable a company is relative to its total assets. ROA gives an idea as to how
efficient management is at using its assets to generate earnings. Calculated by dividing a company's
annual earnings by its total assets, ROA is displayed as a percentage. Sometimes this is referred to as
"return on investment".

The formula for return on assets is:

Equity Multiplier
A measure of financial leverage. Calculated as:

Total Assets / Total Stockholders' Equity

Like all debt management ratios, the equity multiplier is a way of examining how a company uses debt to
finance its assets. Also known as the financial leverage ratio or leverage ratio.

Profit Margin
A ratio of profitability calculated as net income divided by revenues, or net profits divided by sales. It
measures how much out of every dollar of sales a company actually keeps in earnings.

Profit margin is very useful when comparing companies in similar industries. A higher profit margin
indicates a more profitable company that has better control over its costs compared to its competitors.
Profit margin is displayed as a percentage; a 20% profit margin, for example, means the company has a
net income of $0.20 for each dollar of sales.

1) Interest expense ratio = interest expense/ Total operating income

2) Provision for loan Ratio = Provision for loan losses/ Total operating income
3) Non- interest expense Ratio = Non-interest expense/ Total operating income
4) Tax Ratio = Income tax/ Total operating income

Asset Utilization:
It measures the extend to which bank assets generate revenue. The breakdown of asset utilization ratio
sepeartes the total revenue generated into interest income and non interest income.

Total operating income / Total asset

1) Interest incime Ratio = interest income/ Total asset

2) Non- interest income ratio= non- interest income/ Total income

No. Of Years 2005 2006 2007 2008 2009

ROE= Net 0.403975 0.349902 0.365317 0.195122 0.094773

income/ Total
equity