Bank Performance Valuation

The UBPR report, which covers the operations of a bank, provides a very useful tool for the management of the financial firm, and thus do us a great favor to have a deep understanding of the financial firm.

Directly from the page 1 of the UBPR report, the basic profit status of the commercial bank can be seen both from its development tendency and from the comparison between its own and the peer group ratio.

First, when referring to its interest income and its interest expense, it can be seen that the interest income of this bank is lower than the average status in its peer group, while the interest expense is higher. This lends to a lower net interest income when compared with its peer group. Meanwhile, from the year 2010 to the year 2013, the interest income has suffered a loss for about 16.6 percent with the interest expense decreased by about 53 percent. The whole peer group has the same tendency while the income decreased by only 12 percent and the interest expense decrease by more than 56 percent. This may both lend to the company's poor operation when compared with other commercial banks at the same period. And secondly, its noninterest income is more than twice the income of its peer group's average noninterest income. So though both the noninterest income and the noninterest expense is higher than its peer group, the advantage of its income is bigger than the disadvantage of its expense when in terms of the noninterest income and expenses. Thirdly, its loan and lease losses provision is much higher than its peer group. It can be seen that the peer group's provision has decreased by more than 54 percent from the year 2012 to the year 2013, which leads to the provision of the U.S. Bank National Association is 2.73 times that of its peer group. Then in the end, it can be seen that the net income of this bank is 1.64 times as bigger as its peer group's net income. And this ratio keeps very stable during the past three