Page 19 - FIN435 RHB vs BPMB

Bank Pembangunan External Comparison Evaluation 2018

1. Profitability Ratio
Return On Asset

It shows how capable the management of the bank has been in converting the institution’s
assets into net earnings. This graph show Return on Asset of Bank Pembangunan Vs Agro
Bank for the period basis for the year of 2018. The graph indicates that Agrobank has better
Return On Asset (ROA) which is 0.82% compare to Bank Pembangunan which only record
0.65%. The graph shows that Agrobank generate it profits from total asset better than Bank
Pembangunan Malaysia.

Return On Equity

The Return On Equity (ROE) measures the rate return of flowing of income to the bank
shareholders. It reveals how much the a profit a company earned in comparison to the total
amount of shareholder equity. ROE is is affected by the same income statement items that
affect ROA & the degree of financial leverage. Based on the graph Agrobank record better
ROE which is 4.58% compare to Bank Pembangunan which only 2.19%.. This ratio also
derived from Return On Asset Ratio which Agrobank record better ratio than Bank
Pembangunan.

2. Liquidity Ratio = Loan To Asset Ratio

Loan On Asset Ratio (LOA) is the ratio used to demonstrate the ability of banks to meet the
demand for loans by using the total assets owned by banks. Based on the graph, Bank
Pembangunan has higher Loan on Asset Ratio which is 73.93% compared 64.21% by
Agrobank. Bank Pembangunan has better the credit performance level than Agrobank, but
at the same time it may faced high liquidity risk which may lead to low of liquidity such as not
having sufficient of cash and borrowing capacity to loan demand

3. Capital Adequacy Ratio /Risk Weighted Capital Ratio

The capital adequacy ratio (CAR) is a measurement of a bank's available capital expressed
as a percentage of a bank's risk-weighted credit exposures.. Based on the graph Bank
Pembangunan record higher CAR ratio which is 37.45% compare to 26.50% record by
Agrobank. It can be conclude that, because Bank Pembangunan has higher capital
adequacy ratios a bank has, it may has greater level of unexpected losses that it can absorb
before becoming insolvent.
Core Capital Ratio

The core capital ratio is a measurement of a company's financial leverage.. Based on the
graph comparison Bank Pembangunan has higher ratio 31.22 % than Agrobank 23.1%. We
can conclude that Bank Pembangunan have higher company capital fund dependent
towards debt than Agrobank.

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