Institute of Chartered Financial Analysts of India (ICFAI) University 2006 Certification Finance Management of Financial Institutions - II - Question Paper

ARWAs = RWAs =



Tier I Capital = Paid up capital + Statuory reserves + share premium reserves +Revenue and other reserves+ capital reserves+/-Balance in the profit and loss – Intangible assets- Equity investment in subsidiaries.

Tier II Capital = Undisclosed reserves + Investment Fluctuation reserve + 45% of revaluation of reserves + Special reserves+ Foreign currency translation + Subordinated debt.

(in thousands)


31. 3. 2005
31. 3. 2004

Tier-I capital
460.12+1,255.00+97.91+550.00

+90.41 +40.99

-(18.33+19.16)=2,456.94
460.12+1,039.00+97.91+325.98+12.02

+77.44 -(5.24+19.16)=

1,988.07

Tier-II capital
475.00´.45+555.00+90.00+

0.01+450.00+.40´1520 = 1,916.76
.45´484.68+540.00+50.00+.0.60´1,520.00=

1720.11

Total capital (Tier I+II)
4373.7
3,708.18

CAR
12.09%
12.32%

RWAs
36,170.39
30,098.86

ARW = (RWAs /TA)
36,170.39/72,413.26=

49.95%
30,098.86/58,316.68=

51.61%


Incremental RWAs / Incremental TA = 6086.42/14,096.58= 43.17%

avg. risk weight, which was 51.61% in 2004, has reduced to 49.97% in 2005. Also Incremental RWAs / Incremental TA ratio indicates that the new assets are deployed at a avg. risk weight of 43.17%.



(Rs. in thousands)


31. 3. 2005
31. 3. 2004

Gross NPAs
2,058.15
2,346.84

Net NPAs
1,060.38
845.15

Provision for NPAs
1,375.33
1,466.50

Net advances
40,105.08
28,921.70

Gross advances (Provi for NPAs+Net advances)
41,480.41
30,388.20

Net NPAs as % of Net advances
2.64%
2.92%

Gross NPAs as % of gross advances
4.96%
7.72%

PBT for the year
719.06-107.47

=611.59
(712.05+107.98)

820.03

ENPA =
57.68%
97.02%




Net NPAs as percentage of net advances reduced from 2.92% to 2.64%. The higher the ENPA level the better it would be for the bank as it shows lower credit risk. To achieve a higher level of ENPA, bank has to increase its profitability and decrease its NPA level. The ENPA level has been reduced drastically due to reduce in PBT also the increase of NPAs. We can say that the new credit portfolio of the bank seems to be satisfactory. Since latest advances are not turning into NPAs.

Earning:   Approval pending.