Know which commercial banks are most successful in utilizing assets in generating profit; Nepal Bank and Nabil Bank tops the list
Fri, Feb 9, 2018 12:29 PM on Latest, Exclusive, Featured, Stock Market,
It is really high time for investors to identify the banks which have high capability to earn profit with utilization of their available resources (assets). Earning huge profit is not a big game but earning those profits with minimum utilization of resources (assets) is a great deal for every commercial bank.
Every commercial bank creates assets to earn revenue and profit. But all the banks are not capable of earning at the same rate by utilizing the same amount of assets. The total assets of the commercial banks include cash balance, money at call, investment, loans & advances, fixed assets, non-banking assets and other assets etc. Among all those assets, the bank earns maximum by utilizing their funds on loan and advances.
Here we try to find out the best bank in terms of assets utilization for generating profit.
Return on Assets (ROA) is a financial ratio that shows the percentage of net profit of the banks in relation to its overall assets mobilization. It is commonly defined as net profit divided by total assets. ROA answers the question: "What can you do with the assets that is available with you?" The higher the ROA, the better the management and the company is.
Total Assets of Commercial Banks:
Total Assets and Net Profit of Commercial Banks:
Despite having huge assets, Rastriya Banijya Bank's net profit is less than Nepal Investment Bank and Nabil Bank Limited. NIC Asia Bank has huge assets base but its profit is too low than many commercial banks with lower total assets. Standard Chartered Bank has huge profit compared to its low total assets.
Return on Total Assets:
Graphical Presentation of Return of Assets:
Nepal Bank Limited, Nabil Bank Limited and Standard Chartered Bank limited have higher efficiency in mobilization of their assets. Nepal Bank Limited is earning Rs 2.90 by mobilization of Rs 100 whereas NIC Asia Bank Limited is earning just Rs 0.81 by mobilizing the same amount.
So for the rational investors, it’s wise to choose company not only with high profit but also with high earning capacity with minimum utilization of resources (assets).
Total Assets and Net Profit of Commercial Banks:
Despite having huge assets, Rastriya Banijya Bank's net profit is less than Nepal Investment Bank and Nabil Bank Limited. NIC Asia Bank has huge assets base but its profit is too low than many commercial banks with lower total assets. Standard Chartered Bank has huge profit compared to its low total assets.
Return on Total Assets:
Graphical Presentation of Return of Assets:
Nepal Bank Limited, Nabil Bank Limited and Standard Chartered Bank limited have higher efficiency in mobilization of their assets. Nepal Bank Limited is earning Rs 2.90 by mobilization of Rs 100 whereas NIC Asia Bank Limited is earning just Rs 0.81 by mobilizing the same amount.
So for the rational investors, it’s wise to choose company not only with high profit but also with high earning capacity with minimum utilization of resources (assets).
