Financial Ratio Analysis Of Standard Chartered Bank Plc And UOB: An Evaluation Of Bank Performance And Potential Failure

Standard Chartered Bank Plc

In economic improvement, banks serves as critical part for the economy as these are fundamental financial interlinks that facilitate borrowing and lending exercises within indirect market. In the event that banks might not fit well within industry, it might contribute to huge failure within the economy (Altman 2013). Commercial banks (CBs) are different from other partnership organizations as they have unique components within the assets and liabilities section. Then again, same as few organizations, the business operation of CBs are measured by the basic offer that they issue to their investors.

Standard Chartered Bank Plc (alluded as “the bank”) is among the renowned commercial banks that has it’s headquarter in London, UK. The bank is set up after The Standard Bank merger with The Chartered Bank in 1969. Standard Chartered Bank Plc obtained Standard Chartered Merchant Bank Asia Limited in 1985, Korea First Bank in 2005, ANZ Grindlays Bank in 2000 and American Express Bank Ltd in 2008. Starting at 30 June 2010, the aggregate resource of Standard Chartered Bank Plc achieved USD 480.8 billion and is positioned ninth in UK. The bank had acquired 18.4% of Temasek Holdings and 6.2% of Blackrock Inc (Altman 2013).

UOB is positioned among the renowned banks that has set up itself as a main and local bank in Singapore and in Asia through business acquisitions. Today, the UOB Company has its business operations worldwide in 19 nations within Asia Pacific, Western Europe and North America – having a system of more than 500 workplaces. Singapore, Malaysia, Indonesia, Thailand and China are managing an account backups of UOB. UOB offers a broad range of financial services through its international business partners (Avkiran 2011). The company offers consumers with access to financial services like private management of an account, individual money management, business and corporate money saving.

The financial performance of the commercial banks is required to be assessed and financial ratio analysis serves as an effective measure to evaluate the bank performance in the current paper. In addition, there are many causes due to which such financial condition becomes more intensified, for example, fluctuation on loan fees and external trade rates, liquidity hazard, decreasing society dependence through financial framework, confinement within lending exercises and decreased financial movement. In a situation of loss on operation or working capital deficiency, the company can use the information from its annual report to make effective business decisions (Barathi Kamath 2017). In such scenario, ratio analysis is considered to be an effective analysis that can signify the financial position of the company. In addition the ratio analysis demonstrates a connection between all the elements in income statement or balance sheet or can help in analyzing the profitability or loss trend within the financial statements. Along these lines, in this analysis, it will look out which financial ratios must be utilized in the company to counteract bank failure. A research report regarding “Forecast of bank failure” taken from Aggarwal, Paruthi and Kumar (2014) will be adjusted and those important financial ratios are likewise at that point to be clarified in this analysis.

UOB

Financial analysis is observed to give supplementary information for various leaders. A Several indicators including an analysis in light of characteristics and effects on economy focused organizations will be sought out or discovered and utilized in investigation cash process. A lot of indicators are given to settle on choice regarding picking the vital operating exercises tool along with choosing sorts of venture that must be to be financed (Beaver, Correia and McNichols 2012). Along these lines, an idea has been turned out in the procedure of financial investigation that financial ratios, designs or certain strategies was decided for analyzing. In this way, the indicators are then to research the implementation of the major aspect in deciding.

Keeping in mind the end goal to assess the performance of depository organizations, financial proclamations of commercial banks manages wide range of accessible financial data for public. In contrast with financial explanation accounts, financial ratios are less demanding to clarify an organization’s business operation as in financial reports. In addition, financial ratios are dependably a significant measurement when they work out with an analysis or a reason for reviewing changes in propensity; or the consequences will be severe, a ratio itself is an un-significant number in light of the fact that the ratios utilized as a part does not totally explain the business performance of the company (Berger et al. 2012). Organization analyses those ratios at that point to compare them and develop standard ratios for itself or different organizations in a similar industry. This helps in analyzing the organization’s propensity by utilizing same ratio over a long time that is picked arbitrarily relying upon organization needs.

Applying pertinent financial ratios, is an approach to screen an organization’s position by drawing out the outcome on how the organization effectively created stores and benefits. As indicated by the ratios with a year based investigation (financial proclamation is examined in a particular time), it perfectly secured the count by alluding the measurement taken from an association’s financial explanation, with the goal that those ratios can demonstrate an organization financial status. The correlation which utilizes organization’s comparable ratios in a portion of year is deemed as cross-sectional analysis (Bhattacharyya, Lovell and Sahay 2013). Cross-sectional analysis utilizes organization’s comparative ratios in a portion of years to do a correlation. Despite utilizing several financial analysis techniques, ratio analysis is attempting to give a portrayal of organization’s strengths and shortcomings for assessing the vital part on of financial situation of the company. In this way, those data offers a few chances for financial specialists, experts and supervisors to conduct a ratio analysis before settling on a choice.

Financial Analysis and Ratio Analysis

Banks are financial organization, despite the fact that they are also financial establishments, which offers detailed financial data different from other financial establishments. Inclination of economy acts as vital part that affects banks’ benefits, as banks’ income majorly originate from the cash they have in net premium salary. This is an aspect based on which the loan costs rely upon the financial condition, so the interest free margin can be kept up as high as it could. “Expectation of bank collapse”, the example has drawn a perfect decision based on six financial ratios clarified in this analysis.

Credit loss ratio signifies changes on liquidity are a critical change to be expected. In addition, defaulting credits are vital to be considered than liquidity changes. Credit loss ratio can be understood as ratio which signifies net measure of credit faults remains connected in aggregate sum of bank offering with borrowers. It is an attainment rate that remains decreased than one within ratio.

At the point the banks considered lending exercises; it is conceivable to realize importance of credit loss. By taking a look at credits, bank will expect that most of them will end up being a default installment. In estimation of banks’ benefit before charge, banks might follow conceivable costs. Consequently, banks were ensured that when borrowers neglect to pay; they remain within controller capital necessity along with financial commitments. Negative situation has appeared to bank’s business at the time credit loss was increased (Chaudhary and Sharma 2011). Conversely, an analysis in credit loss will be done with different banks through explaining credit loss over aggregate lending. By focusing on default credits, it can be said that more prominent the bank can deal with aggregate lending, the more littler the rate will be observed within this ratio.

The second ratio within exploration shows critical connection among operating income along with operating costs. This ratio measures the effective way in which bank has a capacity to manage working costs by producing operating income. In this way, this ratio will be looked for maintaining a high ratio under such circumstances (Malhotra and Singh 2016).

Cost-to-income ratio is all the regularly utilized by bank to show operational effectiveness after financial emergency that happened. In this ratio, bank’s capacity is not to focus on dealing with working costs which it probably ought to be limited. Thus, bring down value is more favored.

In this ratio, adding up to working expense is best for computing those charges on poor obligation along with suspicious obligation. Moreover, working salary is including the aggregate sum of net intrigue and salary with no intrigue.

Credit Loss Ratio

This ratio can be explained as the way in which banks create net interest pay from credit resources (additionally called as interest acquiring resources). It is likewise maintaining a proximity ratio along with non-financial organizations’ gross profit edge (Hill, Perry and Andes 2011).

Net interest margin = Net Interest Income/Average Total Assets

Earnings per share are a ratio that gauges net benefit gained by banks or participating organizations in connection to amount of customary offers issued. In financial investigation, this ratio is typically used to give compensation to basic investors on their venture. In any case, EPS is largely affected by the amount of regular offers issued (Chu and Lim 2014).

Earnings per share = Net income/Number of ordinary shares issued

This ratio is among the most important ratios that remain within the strategy of producing more cash. In such scenario, Return on Equity (ROE) is important among them. With respect to measuring benefit, ROE is the financial ratio that explains utilizing investor contributed cash to bank’s reserve.

Return for Equity = Net income owing to investors/Shareholders’ value

As a financial specialist, bank investors are probably going to see this ratio to be as high as expected under certain circumstances (Chiaramonte and Casu 2017). In any case, a higher ROE additionally bring up an increase in risks. On the other hand, a development risk of dissolvability issue is because of the reason that bank has a trouble to maintain the least standard of controller capital along these lines that causes a major fall in investors’ finance.

In capital adequacy ratio, a controller ratio was made to ensure banks or other financial organizations have adequate cash-flow to remove them from trouble and furthermore ready to deal with a huge number of loss.

Capital adequacy ratio = Teir1+ Teir2 capital/Risk weighted assets

Number of volume that bank is ready to find is controlled by the bank’s capacity to payback its investors on time and extra risk taken (Chiaramonte and Casu 2017). This ratio focuses on analyzing a measure of capital used to deal with the risks in saving money. Since bank has different sorts of benefits, a few assets are discarded in the record, for example, credits and credit risk of advances. In view of Basel II, CAR is not permitted to maintain a standard level of 8%.

The research questions those are to be answered in carrying out Financial Comparison between Standard Chartered Bank and United Overseas Bank are explained under:

• Why financial ratio evaluation is selected for investigating performance of selected companies?
• What are financial ratios that will be used in order to prevent banking collapse?
• What is the importance of analyzing six selected financial ratios?

Operating Income and Operating Costs

The research objectives those are to be addressed in carrying out Financial Comparison between Standard Chartered Bank and United Overseas Bank are explained under:

• To evaluate whether the financial ratio evaluation should be selected for investigating performance of selected companies
• To evaluate whether the financial ratios will be used in order to prevent banking collapse
• To evaluate the importance of analyzing six selected financial ratios of the selected banks

Exploratory research is carried out in the analysis for the reason that financial ratios were being found from case of forecasting bank emergency. Thus, it offers increased sense to this point. In this manner, between major research approaches that includes quantitative research and subjective research, subjective research is highly appropriate to employ for such research (Hill, Perry and Andes 2011). The cause of selecting subjective research as an exploration approach is because such research is depended on an improvement of hypothesis.

In the research, procedure that is utilized is managing the contextual investigations is focused on contemplating financial ratios that is utilized inside bank to avert insolvency. A reference is coded from previous research explains that, it is appropriate as a solitary outline of contextual analysis and in case when the hypothesis presents a detailed rule in basic case. Furthermore, contextual investigation is required in the exploration as best approach to distinguish significant financial ratios.

There exist two approaches for information accumulation for an analysis:

1) Essential information; and

2) Optional information. Information which is gathered in view of addressing particular objective to settle the research question is considered as essential information.

Optional information is likewise called as secondary information which explains that a collection of assets is taken from the analysis that is already available in previous researches and is there for utilization. In this research, it has turned out to be a source of attaining optional information, for example, diary, article, online reading material, solid site and few more. Furthermore, this analysis was not carrying out any essential information accumulation as it is not required to do as such (Hill, Perry and Andes 2011). The secondary information appears to be gathered for other reason other than analyzing in this investigation therefore this supplementary information has been checked properly. The collection process selected was principally to understand major part of the issue by analyzing that information.

Information analysis serves as a strategy breakdown from graphic analysis, was utilized as a part of carrying out investigation for the research. The example of Meyer and Pifer demonstrated six financial ratios remain essential as best approach to deal with insolvency. Considering the same, research was conducted by utilizing associated accessible information. Significance of these ratios must be analyzed before utilizing such aspects to conduct analysis on two selected banks.

Cost-to-Income Ratio

By utilizing secondary information in this exploration, a couple of limitations are experienced that reduced information usefulness. Due to such limitations, researcher ought to be inefficient while utilizing the secondary information. In view of those issues, the researcher may require significant investment in examining the ratios as it perhaps serves as an appropriate analysis (Goyal and Joshi 2011). Thus, it offers increased sense to this point. In this manner, between major research approaches that includes quantitative research and subjective research, subjective research is highly appropriate to employ for such research. Consequently, in this analysis, use of secondary information is important to get an alternate complaint with initial information originator.

As per Goyal and Joshi (2011), certain optional information was utilized focused on the researcher that ought to guarantee that they could satisfy the accompanying qualities:

Since secondary information is accessible and simple to attain, it ought to be focused on feeling of unwavering quality. In such aspect, it might be tried through discovering appropriate response from pertinent inquiries. Those inquiries are:

(a) Who is individual that gathered information?

(b) What sort of sources are available for information turned out with?

(c) Were all information gathered through a moral ways?

(d) When were such information gathered?

(e) Was there certain contentions showed up with first specialist?

(f) Which type exact information was desired? Is it accurate to say that it was accomplished or not?

As secondary information must be gathered from accessible data, as, those information accumulations were done to suit the research analysis. Hence, rationality of information relies upon the agent’s exploration prerequisite, it might be reasonable for one however not another. Along these lines, the clearness of layout and company units are utilized at the occasion of gathering essential information sources must be investigated precisely by researcher. The comparable approach to do as such on considered the reason, range and nature of first analysis. In conclusion, the researcher ought not to utilize that information if any distinctions were found in, in light of the fact that they demonstrated inadmissible with as of now analysis.

• Sufficiency

The researcher might not utilize the optional information that was discovered to be inadequate despite the fact that the information achieved maintains the level of exactness; they are as yet considered to be lacking. In the event that the range of information which is either more extensive or smaller than the at present analysis zone, the information was moreover considered as deficient. From every one of the attributes, it was being evidenced that a high risk is involved in utilizing the prepared accessible information. The prepared accessible information is a concern just when they are deemed to be adequate, appropriate and dependable for the researcher. In other perspective, if the prepared accessible information was turned out from reliable sources and likewise reasonable and adequate. Analysis of the same is deemed to be simply aimless for using it as it is not worth to rely on utilizing study to gather data. Now and again, helpfulness of optional information might be profited by the researcher who must utilize the data under self-assurance.

Net Interest Margin

STANDARD CHARTERED PLC  (02888) CashFlowFlag BALANCE SHEET
Fiscal year ends in December. USD in millions except per share data.	2012-12	2013-12	2014-12	2015-12	2016-12
Assets
Cash and due from banks	61043	54534	97282	65312	70706
Trading assets		102716	104238	114767	108972
Derivative assets	49496	61802	65834	63143	65509
Debt securities		-102716	-104238	-114767	-108972
Net loans	352266	374410	368585	321850	325328
Premises and equipment	6646	6903	7984	7209	7252
Goodwill	6539	5207	4224	3616	3456
Other intangible assets	773	863	966	1026	1263
Other assets	159755	170661	181039	178327	173178
Total assets	636518	674380	725914	640483	646692
Liabilities and stockholders’ equity
Liabilities
Deposits	414116	424583	459744	388244	408749
Derivative liabilities	47192	61236	63313	61939	65712
Other liabilities	129848	142315	156425	142109	123894
Total liabilities	591156	628134	679482	592292	598355
Stockholders’ equity
Common stock					7091
Additional paid-in capital				5449
Retained earnings				26934	25753
Accumulated other comprehensive income	45362	46246	46432	15808	15493
Total stockholders’ equity	45362	46246	46432	48191	48337
Total liabilities and stockholders’ equity	636518	674380	725914	640483	646692

Assets
Cash and due from banks	42547	57069	63775	60952	58434
Trading assets	260	628	738	1277	3127
Derivative assets	5456	5779	6306	6422	6982
Debt securities	-260	-628	-738	-1277	-3127
Net loans	152930	178857	195903	203611	221734
Receivables	575	740	1579	3905	813
Premises and equipment	1234	1308	1428	1739	1885
Goodwill	4168	4144
Other intangible assets			4149	4144	4151
Other assets	45990	36331	33596	35239	46030
Total assets	252900	284229	306736	316011	340028
Liabilities and stockholders’ equity
Liabilities
Deposits	203567	228254	244976	252511	267169
Derivative liabilities	5506	5878	6384	5969	6837
Other liabilities	18747	23710	25807	26763	33148
Total liabilities	227820	257841	277167	285243	307154
Stockholders’ equity
Common stock	5272	5333	5892	5881	6351
Retained earnings	10222	12003	14064	15463	17334
Accumulated other comprehensive income	9586	9053	9613	9424	9189
Total stockholders’ equity	25080	26388	29569	30768	32873
Total liabilities and stockholders’ equity	252900	284229	306736	316011	340028

STANDARD CHARTERED PLC  (02888) CashFlowFlag INCOME STATEMENT
Fiscal year ends in December. USD in millions except per share data.	2012-12	2013-12	2014-12	2015-12	2016-12
Revenue
Interest income
Other assets	18258	17593	16984	14613	13010
Total interest income	18258	17593	16984	14613	13010
Interest expense
Other expense	7248	6437	5981	5206	5216
Total interest expense	7248	6437	5981	5206	5216
Net interest income	11010	11156	11003	9407	7794
Noninterest revenue
Commissions and fees	4121	4101	4179	3607	3231
Other income	1110	286	-1130	-7677	-2547
Total noninterest revenue	5231	4387	3049	-4070	684
Total net revenue	16241	15543	14052	5337	8478
Noninterest expenses
Tech, communication and equipment	2758	1797	2042	2559	2372
Amortization of intangibles		281	205	227	286
Other special charges		1000	1461	855	597
Other expenses	-2758	-3078	-3708	-3641	-3255
Total noninterest expenses
Income (loss) from cont ops before taxes	16241	15543	14052	5337	8478
Provision (benefit) for taxes	1891	1864	1530	673	600
Other income (expense)	-9463	-9589	-9909	-6858	-8125
Net income	4887	4090	2613	-2194	-247
Net income available to common shareholders	4887	4090	2613	-2194	-247
Earnings per share
Basic	1.9	1.56	0.97	-0.85	-0.14
Diluted	1.88	1.55	0.97	-0.85	-0.14
Weighted average shares outstanding
Basic	2518	2549	2583	2568	3291
Diluted	2544	2571	2598	2568	3305

UNITED OVERSEAS BANK LTD  (U11) CashFlowFlag INCOME STATEMENT
Fiscal year ends in December. SGD in millions except per share data.	2012-12	2013-12	2014-12	2015-12	2016-12
Revenue
Interest income
Other assets	6202	6508	7189	7826	8291
Total interest income	6202	6508	7189	7826	8291
Interest expense
Other expense	2285	2388	2632	2900	3300
Total interest expense	2285	2388	2632	2900	3300
Net interest income	3917	4120	4558	4926	4991
Noninterest revenue
Commissions and fees	1508	1731	1749	1883	1931
Securities gains (losses)			218	313	101
Other income	-17	-41	-386	-453	-179
Total noninterest revenue	1490	1690	1581	1744	1852
Total net revenue	5407	5810	6139	6670	6843
Noninterest expenses
Tech, communication and equipment	1013	1022	1159	1349	1437
Amortization of intangibles	7
Other expenses	-1021	-1022	-1159	-1349	-1437
Total noninterest expenses
Income (loss) from cont ops before taxes	5407	5810	6139	6670	6843
Provision (benefit) for taxes	531	559	561	649	669
Other income (expense)	-2074	-2243	-2329	-2812	-3078
Net income	2803	3008	3249	3209	3096
Preferred dividend			102	105	92
Net income available to common shareholders	2803	3008	3147	3104	3004
Earnings per share
Basic	1.72	1.84	1.98	1.94	1.86
Diluted	1.71	1.84	1.97	1.93	1.85
Weighted average shares outstanding
Basic	1574	1575	1591	1602	1617
Diluted	1578	1580	1597	1607	1623

	Standard Chartered Bank (2016)	United Overseas Bank (2016)
Credit Loss Ratio	12.41920609	4.848325289
Net credit losses/ Total lending

Credit loss ratio is characterized as the ratio of current credit related loss to the present standard esteem or unique standard estimation of the Mortgage Backed security (MBS). Home loan sponsored securities are the securities that are moved down by home loans or gathering of home loans. Credit loss ratio for Standard Chartered Bank for the year 2016 is observed to be 12.41920609. In the other hand Credit loss ratio for United Overseas Bank for the year 2016 is observed to be 4.848325289. Such results indicate that this ratio is higher for Standard Chartered Bank and this gauges the measure of risk resource that is presented to and gives the guarantor organization to perceive what sort of activities and arrangements they have to embrace keeping in mind the end goal to alleviate the loss in the event that the hazard is high. The credit loss ratio of United Overseas Bank is decreased that indicates this ratio will help them to break down the measure of hazard their home loans are presented to and additionally choose the arrangement they might want to embrace so as to relieve the hazard.

	Standard Chartered Bank (2016)	United Overseas Bank (2016)
Cost/Income Ratio	0.067607182	0.94928401
Income/ Cost

Cost/ Income ratio analysis for Standard Chartered Bank for the year 2016 is observed to be 0.067607182. In the other hand Cost/ Income ratio analysis for United Overseas Bank for the year 2016 is observed to be 0.94928401. Such results indicate that the cost-to-pay ratio of United Overseas Bank is major financial measure, imperative in certain banks. It demonstrates that a company has high expenses in link to its pay. To attain such ratio, Standard Chartered Bank can separate the operating costs (managerial and settled costs, for example, compensations and property costs, however not terrible obligations that was composed off) through operating income. The ratio offers financial specialists a faulty perspective regarding the ways in which the firm is being run effectively– the lower this aspect, the more productive the bank remains. Decreased changes in ratio of Standard Chartered Bank can feature potential issues: if such ratio starts with a year then onto next case of United Overseas Bank, it implies that expenses are ascending at a higher rate than wage, which could propose that the organization has taken its eye off the ball in the drive to draw in business.

	Standard Chartered Bank (2016)	United Overseas Bank (2016)
Net Interest Margin Ratio	0.012052105	0.014678203
Net Interest Income/ Average Total Assets

Net Interest Margin Ratio Analysis for Standard Chartered Bank for the year 2016 is observed to be 0.012052105. In the other hand Net Interest Margin Ratio Analysis for United Overseas Bank for the year 2016 is observed to be 0.014678203. Such results indicate that Net interest margin serves as metric that focuses on how effective an association’s venture choices are aligned with obligation circumstances. A less margin of United Overseas Bank means that firm did not settle with ideal choice, since premium costs remains more noteworthy than profits measure created by ventures.

Earnings Per Share

Net Interest Margin Ratio is a ratio that measures Standard Chartered Bank is high that indicates the way a firm is successful at putting its assets within the costs on similar ventures. It regularly focuses on a bank or venture firm that would contribute investors cash, taking into account a premium edge between what is paid to the bank’s customer and what is produced using the borrower of the assets.

In any case, if this ratio demonstrates a negative position, the bank or venture firm has not contributed their assets productively. In a negative Net Interest Margin situation, the organization would have been ideally serviced by applying the intrigue returns against remarkable obligation or to finance more gainful income streams.

	Standard Chartered Bank (2016)	United Overseas Bank (2016)
Earnings per Share Ratio	3.294642857	22.4084507
Net profit/ Number of ordinary shares issued

Earnings per Share Ratio Analysis for Standard Chartered Bank for the year 2016 are observed to be 3.294642857. In the other hand Earnings per Share Ratio Analysis for United Overseas Bank for the year 2016 is observed to be 22.4084507. Such results indicate that Earnings per Share Ratio, generable net income per share, as market prospect ratio measures of net income gathered per offer of stock is remarkable. Moreover, this serves as measure of cash that each stock offer might get if a huge fraction of benefits were conveyed to extraordinary offers toward end of the year.

Earnings per share are additionally an estimation that indicates the way a productive organization is an investor premise. So a bigger United Overseas Bank’s benefits for each provides might get contrasted with smaller organization’s earnings per share. Clearly, this estimation is vigorously impacted on the offers is remarkable. Accordingly, a United Overseas Bank focus on gaining numerous stock offers in contrast to a smaller organization. Earnings per share similar to any productivity or any other ratio and higher earnings per share of Standard Chartered Bank the lower will be this ratio as this implies that the organization is productive and the organization attained benefits to disperse to its investors.

Numerous financial researchers has careful consideration to EPS, a higher profit for each offer ratio regularly influences an organization’s stock cost to increase. Lot things can control such ratio, financial researchers tend to focus on a chance that can impact choices radically.

	Standard Chartered Bank (2016)	United Overseas Bank (2016)
Return on Equity Ratio	0.007633904	0.096796763
Net profit attributable to shareholders/ Shareholders’ equity

Return on Equity Ratio Analysis for Standard Chartered Bank for the year 2016 is observed to be 0.007633904. In the other hand Return on Equity Ratio Analysis for United Overseas Bank for the year 2016 is observed to be 0.096796763. Such results indicate that the Return on Equity ratio or ROE or productivity ratio measures capacity of Standard Chartered Bank to generate benefits of investors interests within organization. Moreover, the Return on Equity ratio demonstrates much benefit each dollar of normal investors’ value produces.

Return on Equity

As 1 implies that every dollar of normal investors’ value generates 1 dollar of net income. This serves as imperative estimation financial statements as they need to perceive the way in which proficiently an organization can use their cash to generate net income. ROE has pointed of the way in which successful administration is used in value financing to finance operations along with advancing the organization.

Profit for value for Return on Equity Ratio measures the way a firm can use cash from investors to produce benefits and develop the organization. Other quantifiable profit ratios, is ROE that serves as a benefit ratio from financial specialist perspective and not organization. In addition, this ratio makes sure such cash is developed in view of financial specialist’s interest within company, not the organization interest within resources and something unique.

Being stated, speculators of Standard Chartered Bank are observed that this is to observe this ratio since this indicates the organization is using its financial specialist’s assets adequately. Higher ratios of Standard Chartered Bank are often superior to bring down ratios, yet might get contrasted with organizations ratios in business. Since each industry has distinctive levels of financial specialists and salary, ROE can be utilized to look at organizations outside of their ventures adequately.

	Standard Chartered Bank (2016)	United Overseas Bank (2016)
Capital adequacy ratio	649.1448931	93.00361359
Teir1+ Teir2 capital/ Risk weighted assets

Capital Adequacy Ratio Analysis for Standard Chartered Bank for the year 2016 is observed to be 649.1448931. In the other hand Capital Adequacy Ratio Analysis for United Overseas Bank for the year 2016 is observed to be 93.00361359. Such results indicate that Capital ampleness ratio (CAR) is a particular ratio utilized by banks to decide sufficiency of their capital maintenance to observe their hazard exposures. Keeping money controllers needs a base capital ampleness ratio in order to give banks a chance to retain loss before they end up plainly bankrupt. United Overseas Bank being low indicates that this enhances solidness in financial markets along with ensuring store holders. Basel Committee on the banks Banking Supervision of International Settlements creates rules identified with capital sufficiency which part nations are relied upon to follow. If national controller requires a capital ampleness ratio of 10%, the bank is protected. In addition, if the required ratio is 15%, the bank may need to confront administrative activities.

Conclusion

The research was carried out to address issues regarding ratio analysis and in completing this research Financial Comparison between Standard Chartered Bank and United Overseas Bank was carried out. Along these lines, in this analysis, it is analyzed that which financial ratios could be utilized in the best approach to counteract bank disappointments. From the financial and ratio analysis it was gathered that Credit loss ratio indicate that this ratio measures the intensity of risk resource that is presented to the bank and supports the guarantor organization to perceive what sort of activities and arrangements they have to embrace keeping in mind the end goal to alleviate the loss in the event that the risk is high. The credit loss ratio will help them to break down the measure of risks that their home loans are dealing with and additionally choose the arrangement they might want to embrace so as to relieve the hazard.

Conclusion

Relied on findings of financial ratio analysis of selected banks namely Standard Chartered Bank Plc and United Overseas Bank certain important recommendations are provided to both the banks. Financial ratio analysis helps to derive an organization’s arrival on value so as the after-charge cost of obligation is lower than its arrival on value.

Enhance resource turnover: Resource turnover is a measure of an organization’s productivity. One can find it by separating deals by the organization’s aggregate resources. All in all, the deals that a company produces with respect to certain benefits can get highly beneficial and higher profit for value it can obtain.

United Overseas Bank is recommended to start disseminating immobile money to investors that can be a viable approach for an organization. The main difference in this illustration is how much settlement without moving money is perched on the financial record. At the point when money increases within an organization’s financial report, it can drag down an organization’s arrival on value. This is the reason it’s vital to consider an organization’s financial use while examining an organization’s arrival on value.

Reference List

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Avkiran, N.K., 2011. Association of DEA super-efficiency estimates with financial ratios: Investigating the case for Chinese banks. Omega, 39(3), pp.323-334.

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