Analysis of Financial Institutions

Free CFA Level II lesson in Financial Statement Analysis. 12 min read, ~1,844 words.

NIM = Net interest income / Avg earning assets. The bank equivalent of gross margin, measuring spread profitability. Efficiency ratio = Non-interest expense / Total revenue. Provisions are deliberately excluded so operating cost discipline is isolated. Credit quality requires provision, allowance, and net charge-offs read together. Declining provision with rising...