Remaining Time: 1 hour, 59 minutes, 39 seconds. Question Completion Status: QUESTION 1 This is a case study of 5 SECTIONS ay answering the following you will be conducting a comparative financial ratio analysis between the two banks: EBD and Um Al Quwain Bank for the year 2019. You have the following data for both banks. Data are in milions of USO Item ENDD Umm Al Quwain Bank Net Income (operating income) 2.507.20 116.45 Total equity 19.630 1,299 Total assets 180.031 3.892 mm Al-Quwain bank SECTION APROFITABILITY (15 marks) A Calculate the following profitability and ROE components ratios (6XT mormor) Ratio Formula ENOD Return on equity (ROE) (Not Income TollectX 100 ROEROA X Equity multiplier Return on Assets (ROA) (Net Income / Total a) X 100 Not interest margin X operating efficiency Equity multiplier Leverage ratio) Total assets/total equity Capital rationense of leverage ratio) (Total equity / total sets) X 100 3.From your answer in compare the profitability ratios (OE and ROA) of both banks (smart) CDy looking at the value of ROA and Capital ratio of both banks.compare the drivers of portability for it, and for Al Quwain bank 2 marks x 25 marks marks SECTION B.LIQUIDITY 2x25 marks smarku In this section, you will go deeper in analysing the financial situation of the two banks You are provided with the following liquidity ratlos Ratio Formula Um AlQuwain Bank ENBD Che Sand Sandst. Click Save all to walls Save All Antwer Remaining Time: 1 hour, 59 minutes, 32 seconds. Question Completion Status: 95% B. From your answer in A compare the profitability ratios (ROE and ROA) of both banks (4 marks) c. By looking at the value of ROA and capital ratio of both banks, compare the drivers of portability for EBD, and for Al Quwain bank 2 marks x 25 marks = 5 mark SECTION B: LIQUIDITY 22.5 marks marks) in this section, you will go deeper in analysing the financial situation of the two banks You are provided with the following liquidity ratios Ratio Formula ENBD Um AlQuwain Bank Cash ratio Cash and due from banks/total assets 8% 12% Loan-to-deposit ratio Total loans / total deposits 122% Based on your comparison of the two banks in the profitability section discuss the difference in the liquidity position of two banks by answering the following A What is the effect of higher liquidity (measured by the Cash ratio) on profitability measured by the ROA? 3. Umm Al Quwain Bank has higher Loan to deposit ratio. What are the implications of this liquidity position as measured by the loan-to-asset ratio? SECTION CEINTERMEDIATION 15 marks) In this section you are given the following intermediation ratios and average interest rates Ratios Formula ENBD Um Al Quwain Bank Net interest margin (interest income - Interest expense) / total assets 23% 3.8% Average Interest rate on loans Interest income / total loans 4.7% 5.3% Average interest rate on deposits Interest expenses total deposited and debt 2.2% 1.2% Net Spread Average rate on loans. Average rate on deposits 25% 4.2% Deposit to assets ratio Total deposit total assets 74.4% 63 294 Use the ratios in the above table and other tables if necessary to discuss why the reasons and implications for the Net Interest margin and net spread are higher for Um Al Quwain Bank than EBD's? SECTION DE CREDIT RISK AND OPERATING EFFICIENCY (2x 5 marks = 10 marks) In this section, you are given the following credit risk ratios and operating efficiency ration: Click Save and submit to save and womit. Click Save Allan Question Completion Status A What is the effect of higher liquidity measured by the Cash ratio on profitability measured by the ROA? 8. Umm Al Quwain Bank has higher Loan-co-deposit ratio What are the implications of this liquidity position as measured by the loan-to-asset ratio? SECTION C INTERMEDIATIONS marks) In this section, you are given the following intermediation ratios and average interest rates Ratios Formula ENBD Um AlQuwain Bank Net interest margin (interest income interest expense) /totalets 2.3% Average interest rate on loans Interest income total loans 4,7% 5.3% Average Interest rate on deposits Interest expenses/total deposited and det 2.2% 12% Net Spread Average rate on loans. Average rate on deposits 25% 42% Deposit to assets ratio Total deposit totales 74.4% 03 2% Use the ratios in the above table and other tables if necessary to discuss why the reasons and implications for the Net interest margin and net spread are higher for Um Al Quwain Bank than ENDD'S? SECTION DE CREDIT RISK AND OPERATING EFFICIENCY2x 5 marks 10 marks) In this section, you are given the following credit risk ratios and operating efficiency ration: ENBO Umm Al Quwain Bank Credit risk ratio LLP ratio Loans to assets ratio Deposit to assets ratio Operating efficiency Operation efficiency 1 Operating efficiency 2 Formula Loon los provisions/totales Total loans / Total assets Total depositotalasses 0.71% 71% 74.4% 0.54% 77% 632% Total Operating income total operating expense Noninforest expense/total assets 165% 1.33% 303% 0.99% A A Based on credit ratio data, which bark has the highest credit risk? Gustify your answer B. Based on the operating efficiency ratios, discuss which bank appears to be more efficient and suggest how it managed to be more efficient? SECTION FS marks) Based on the analyses above, make a summary note why bank ENBO has higher ROE Cho Sew and submit to sew and submit. Click Saw All Amers to me all aner