Page 20 - FIN435 RHB vs BPMB
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4. Asset Quality Ratio
Non Performing Loan Ratio
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 graph comparison we can observe that Bank Pembangunan has
higher NPL ratio which is 12% compared to only 3.2% by Agrobank. We can conclude that
Bank Pembangunan may face higher credit quality risk than Agrobank due to high number of
outstanding loan.
Loan to Deposit Ratio
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 graph comparison, Bank
Pembangunan has higher ratio that is 3.19 times than Agrobank that only recorded 1.02
times. It can be conclude that Bank Pembangunan may has better profit due to higher
number of loan, but also obtain higher risk and may not have enough liquidity to cover any
unforeseen fund requirements.
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