Key Trends Identified in SSB's Profitability from 1991 through 1993
According to the calculated ratios in Table-1, SSB had the following major trends in profitability during the time of 1991 to 1993:
? Decreasing return on equity (ROE) - shareholder return
? Gradual & unsteadily decreasing return on assets (ROA) - managerial efficiency
? Decreasing net non interest margin ? less profit earned on non-interest banking components
? Increasing earnings spread ? have established effective processes of borrowing and lending money with little immediate threat of competitors
? Unfavorably increasing operating efficiency ratio - there is an excess of operating cost in relation to operating revenues generated by SSB.
? Declining credit risk/depositor risk ? decline of bad loans, increased market values of good loans relative to amount of deposits.
? Increasingly higher interest rate risk - meaning that there is about 30% of excess interest sensitive assets compared to interest sensitive liabilities.
SSB's Major Strengths and Weaknesses in Terms of Profitability at Year-End 1993
According to the calculated ratios in Table-1, SSB had the following strengths and weaknesses.
Strengths:
? Slightly increasing net interest margin (NIM): This indicates favorable control and management of interest income and interest expenses, in relation to SSB's total assets.
? Increased earnings spread: This indicates that SSB has established effective borrowing and lending processes. This also indicates a period of non-increasing competition, so SSB can continue to operate on th ...