Bank X and Bank Y are two of the top 5 banks operating in Zambia. As of 31 December 2023, Bank X held 14% of the total assets and deposits in the Zambian banking sector, while Bank Y held 16%, respectively. The two banks have a comparable number of branches and ATMs spread out over the country and are typical commercial banks engaged in both retail and wholesale business. REQUIRED: To answer the questions, refer to the summary financial statements of Bank X and Bank Y in Annex 1 (and the associated Excel worksheets). For all balance sheet items, you must use average amounts when performing the ratio analysis (e.g., average assets for (2023) = [Total assets (2023) + Total assets (2022)] divided by 2). ▪ You must present all the numerical answers to two decimal places. 3. Net Interest Margin (NIM) A. Calculate the NIM ratios for Bank X and Bank Y and what can you conclude from the results obtained. B. By decomposing the ratio into its major components, clearly show the sources of the difference in the two banks’ NIM ratios. Please summarise the results in a table format. D. What is(are) the major contributor(s) for the difference in the performance of the two banks as revealed by the results in (B) above?
Bank X and Bank Y are two of the top 5 banks operating in Zambia. As of 31 December 2023,
Bank X held 14% of the total assets and deposits in the Zambian banking sector, while Bank Y
held 16%, respectively. The two banks have a comparable number of branches and ATMs spread
out over the country and are typical commercial banks engaged in both retail and wholesale
business.
REQUIRED:
To answer the questions, refer to the summary financial statements of Bank X and Bank Y in
Annex 1 (and the associated Excel worksheets).
For all balance sheet items, you must use average amounts when performing the ratio
analysis (e.g., average assets for (2023) = [Total assets (2023) + Total assets (2022)]
divided by 2).
▪ You must present all the numerical answers to two decimal places.
3. Net Interest Margin (NIM)
A. Calculate the NIM ratios for Bank X and Bank Y and what can you conclude from the
results obtained.
B. By decomposing the ratio into its major components, clearly show the sources of the
difference in the two banks’ NIM ratios. Please summarise the results in a table format.
D. What is(are) the major contributor(s) for the difference in the performance of the two banks
as revealed by the results in (B) above?
4. Burden ratio
A. Calculate the burden ratios for Bank X and Bank Y and what can you conclude from the
results obtained.
B. By decomposing the ratio into its major components, clearly show the sources of the
difference in the two banks’ burden ratios. Please summarise the results in a table format.
C. What is(are) the major contributor(s) for the difference in the performance of the two banks
as revealed by the results in (B) above?
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