Page 86 - FINAL CFA II SLIDES JUNE 2019 DAY 5.2

READING 17: ANALYSIS OF FINANCIAL INSTITUTIONS

MODULE 17.5: OTHER FACTORS

1. liquid assets for 2017 = 1.02% + 15.96% = 16.98% liquid assets for 2016 = 0.96% + 14.68%
= 15.64%

2. Bank’s liquidity position improved from 2016 to 2017.

3. Loans (net of allowances) and including repurchase agreement loans and securities
borrowed are: 2017: 7.83% + 4.15% + 36.20% = 48.18%

4. 2016: 9.23% + 3.87% + 35.37% = 48.47%

5. On a relative basis, the bank’s lending activities have not changed significantly from 2016 to
2017.

6. investments for 2016 = 14.94% + 11.60% = 26.54% Investments seem to have declined
slightly on a relative basis from 2016 to 2017.

7. J.P. Morgan’s capital levels have generally been increasing over time indicating a
strengthening of capital position. Additionally, Common Equity Tier 1 ratio of 1 12.20% for
2017 exceeds the minimum level of 4.5% specified by the Basel III framework. Total Tier 1
capital ratio of 13.90% exceeds the minimum recommended level of 6%, and the total capital
of ratio of 15.90% exceeds the minimum recommended level of 8%.

8. Level 3 assets represent 3.2% of total fair value assets. Hence, Level 1 and 2 assets must
be 96.8% (100 – 3.2) of total fair value assets.

9. fair value assets as a proportion of total assets = 627 / 2,533.6 = 24.75%

10. Level 3 assets are given to be 0.8% of the bank’s total assets.