Consider the following financial ratios based on published financial statements of two banks and one non-bank financial institutions. The ratios include return on common equity (ROCE), return on net operating assets (RNOA), financial leverage (FLEV), net borrowing costs (NBC) and spread between RNOA and NBC. r is the effective corporate tax rate. NAV represents net asset value per share. ID RNOA FLEV Company Year NAV ROCE ABBANK 2008 30.2 50.98% 11101 10.77% 10.75 11101 ABBANK 2009 40.1 50.82% 10.44% 9.54 11101 ABBANK 44.1 38.75% 8.47% 7.85 11101 ABBANK 40.7 9.83% 5.02% 6.86 11101 ABBANK 36.6 9.75% 5.42% 7.32 11101 ABBANK 2013 34.8 6.78% 4.33% 7.61 11101 ABBANK 2014 35.2 8.68% 3.98% 8.89 11101 ABBANK 2015 50.2 7.77% 4.50% 23.47% 7.75% 16.68% 6.99% 11101 ABBANK 2016 36.0 7.05% 4.27% 11138 BRACBANK 2008 34.3 31.69% 9.10% 11138 BRACBANK 2009 42.9 25.26% 8.79% 11138 BRACBANK 2010 52.7 11138 BRACBANK 2011 28.2 11138 BRACBANK 2012 29.8 11138 BRACBANK 2013 28.0 11138 BRACBANK 2014 28.7 11138 BRACBANK 2015 40.0 11138 BRACBANK 2016 43.0 6.68% 3.83% 11.67% 4.49% 6.48% 16.94% 11.45% 4.55% 16.60% 4.64% 11111 IDLC 2008 64.5 32.58% 11.88% 11111 2009 79.8 13.86% 51.01% 55.46% 15.07% 11111 2010 61.5 11111 2011 40.2 13.56% 8.35% 11111 2012 37.9 17.91% 10.80% 11111 2013 33.6 14.27% 9.81% 32.5 23.03% 10.48% 31.0 22.35% 9.34% 33.8 22.99% 8.53% 11111 11111 11111 IDLC IDLC IDLC IDLC IDLC IDLC IDLC IDLC 2010 2011 2012 2014 2015 2016 NBC 7.03% 6.21% 4.61% 4.32% 4.83% 4.01% 3.45% 10.08 4.17% 9.24 3.96% 10.85 7.02% 9.71 7.10% 7.17 5.56% 7.80 5.75% 9.32 3.52% 10.82 3.83% 9.71 5.40% 5.82 3.37% 6.46 2.79% 7.76 9.21% 7.56 8.94% 6.11 8.46% 3.78 6.98% 4.77 9.30% 5.00 8.91% 5.76 8.31% 5.79 7.10% 5.75 6.02% SPREAD 3.74% 4.23% 3.86% 0.70% 0.59% 0.32% 0.53% 0.33% 0.30% 2.08% 1.70% 2.19% 1.24% 0.31% 0.66% 1.08% 1.18% 1.85% 2.67% 4.92% 6.61% 1.38% 1.49% 0.89% 2.18% 2.25% 2.51% Required: Write a short essay reflecting on the drivers of return on common equity of the three financial companies. Hints: Note that a period from 2011 to 2014 is a high-interest rate regime of the central bank and should be contrasted with the latter period when interest rate decreased markedly.