Page 17 - FIN435 RHB vs BPMB

2.7 BANK PEMBANGUNAN MALAYSIA BERHAD RATIO INTERNAL COMPARISON

1. Profitability Ratio
Return On Assets (ROA):

Return on Assets Graph
1.00% 0.86%
0.78%
0.68%
0.80%
0.60%

0.40%
0.20% Category 1

0.00%

2018 2017 2016
It shows how capable the management of the bank has been in converting the

institution’s assets into net earnings, as. Here the return on asset has a downward
trend from 0.86% in 2016, 0.79% in 2017 and 0.65% in 2018. A slight decrease of
ROA indicates less profitability. Overall, Bank Pembangunan record a slight

decreased for 3 consecutive years from 2016 to 2018 and should take few decisions
to overcome it.

Return On Equity (ROE):

Return On Equity Graph

4.00%
3.05%
2.76%
3.00%
2.22%
2.00%
1.00%

0.00%
Category 1

2018 2017 2016
Return On Equity (ROE) measures the rate return of flowing of income to the bank

shareholders. It reveals how much a profit a company earned in comparison to the
total amount of shareholder equity. ROE is affected by the same income statement
items that affect ROA & the degree of financial leverage. Based on the data, the trend

analysis exhibits downward trend from 3.05 % in 2016 to 2.76% in 2017 to 2.19 % in
2018 consecutively. This trend was influenced by Return on Asset (ROA) data which
also indicate downward trend. In conclusion the shortage of profits leads to this

downward trend. The company has to increased their profit to increase their return on
equity ratio.

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