Page 18 - FIN435 RHB vs BPMB

4. Asset quality ratio
Non Performing Loan Ratio

Non Performing Loan Ratio

Graph

12% 12%

12% 11.87%
12%
12%
11.37%
11%
11%
11%
Category 1

2018 2017 2016

The nonperforming loan ratio, better known as the NPL ratio, is the ratio of the amount of
nonperforming loans in a bank's loan portfolio to the total amount of outstanding loans the
bank holds.. Based on the 3 years analysis, the NPL ratio show upward trend for that
consecutive years from 11.87% in 2016, 11.37% in 2017 and 12% in 2018. The higher the
NPL, the poorer assets quality, the poorer performance which lead to lower net income and
higher loan loss provision. This analysis indicates that the bank fail to manage its loan well
due to the increased of NPL for 3 consecutive years.

Loan to Deposit Ratio

Loan To Deposit Ratio Graph

3.50 3.19

3.00 2.73
2.44

2.50
2.00

1.50
1.00

0.50

0.00
Category 1

2018 2017 2016

The loan-to-deposit ratio (LDR) is used to assess a bank's liquidity by comparing a bank's
total loans to its total deposits for the same period.. Based on analysis, the bank indicate
upward trend from 2016 to 2018 from 2.44 times to 2.73 times and 3.19 times. If the ratio is
too high, it means that the bank has better profit, but higher risk and may not have enough
liquidity to cover any unforeseen fund requirements.

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