The followings are the information extracted from profit and loss account and balance sheet of KBL and SBL. For the fiscal year 2022/23 (in millions of Rupees) Banks KBL SBL : : : Interest income…

a. Net Interest Margin (NIM) Ratio

Formula: $$\text{Net Interest Margin (NIM)}=\frac{\text{Net Interest Income}}{\text{Interest Earning Assets}}\times 100$$ where:

• Net Interest Income (NII) = Interest Income – Interest Expenses
• Interest Earning Assets (IEA) = Loans, Advances, and Bills Purchased + Investments

For KBL:

1. Net Interest Income (NII): $$4,210.50-2,750.30=1,460.20\text{ million Rs.}$$
2. Interest Earning Assets (IEA): $$44,260.25+5,450.00=49,710.25\text{ million Rs.}$$
3. NIM Calculation: $$\frac{1,460.20}{49,710.25}\times 100=2.94\%$$

For SBL:

1. Net Interest Income (NII): $$3,350.45-2,260.20=1,090.25\text{ million Rs.}$$
2. Interest Earning Assets (IEA): $$35,350.35+6,750.20=42,100.55\text{ million Rs.}$$
3. NIM Calculation: $$\frac{1,090.25}{42,100.55}\times 100=2.60\%$$

Answer:

• KBL’s NIM = 2.94%
• SBL’s NIM = 2.60%

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b. Spread Ratio

Formula: $$\text{Spread Ratio}=\frac{\text{Net Interest Income}}{\text{Interest Income}}\times 100$$

For KBL:

$$\frac{1,460.20}{4,210.50}\times 100=34.68\%$$

For SBL:

$$\frac{1,090.25}{3,350.45}\times 100=32.54\%$$

Answer:

• KBL’s Spread Ratio = 34.68%
• SBL’s Spread Ratio = 32.54%

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c. Overhead Efficiency Ratio

Formula: $$\text{Overhead Efficiency Ratio}=\frac{\text{Non-Interest Expenses}}{\text{Total Operating Income}}\times 100$$ where:

• Total Operating Income = Interest Income + Non-Interest Income

For KBL:

1. Total Operating Income: $$4,210.50+450.15=4,660.65\text{ million Rs.}$$
2. Overhead Efficiency Ratio: $$\frac{860.80}{4,660.65}\times 100=18.47\%$$

For SBL:

1. Total Operating Income: $$3,350.45+760.20=4,110.65\text{ million Rs.}$$
2. Overhead Efficiency Ratio: $$\frac{735.60}{4,110.65}\times 100=17.89\%$$

Answer:

• KBL’s Overhead Efficiency Ratio = 18.47%
• SBL’s Overhead Efficiency Ratio = 17.89%

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d. Non-Interest Expenses Ratio

Formula: $$\text{Non-Interest Expenses Ratio}=\frac{\text{Non-Interest Expenses}}{\text{Total Operating Income}}\times 100$$

For KBL:

$$\frac{860.80}{4,660.65}\times 100=18.47\%$$

For SBL:

$$\frac{735.60}{4,110.65}\times 100=17.89\%$$

Answer:

• KBL’s Non-Interest Expenses Ratio = 18.47%
• SBL’s Non-Interest Expenses Ratio = 17.89%

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Comparison of Ratios (Summary Table)

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Note: The calculations above are based on the provided financial data for the fiscal year 2022/23. The ratios indicate KBL’s slightly better profitability and efficiency compared to SBL.