Page 20 - FIN435 RHB vs BPMB

4. Asset quality ratio
Non-Performing Loan Ratio

Non-Performing Loan Ratio

Graph
12%
12%
12%
11.87%
12%
11.37%
12%

11%
Category 1
11%

11%
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 fails 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
2.50 2.44
2.00

1.50

1.00 Category 1
0.50
0.00 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 indicates 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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