Risk Ratios
Risk Ratio of a bank expresses a bank’s position against business and financial risks.These show how the bank has managed to take provision against risky assets (financial risk) as well as how it’s income has varied (business risk) over a period of time.
This takes into account all the component of risky assets. The income, loans against assets. Loans against deposits as well as provision for loan losses are highlighted to give a full view of the precaution taken and state against the various types of risks it faces.

Risk ratio of Premier Bank

Risk Ratio of MTB:

A Comparative View 1. Net Interest Margin
Net interest margin is a measure of the difference between the interest income generated by banks or other financial institutions and the amount of interest paid out to their lenders (for example, deposits), relative to the amount of their (interest-earning) assets.
It is similar to the gross margin of non-financial companies.It is usually expressed as a percentage of what the financial institution earns on loans in a time period and other assets minus the interest paid on borrowed funds divided by the average amount of the assets on which it earned income in that time period (the average earning assets)
Net interest margin is also similar in concept to net interest spread, but the net interest spread is the nominal average difference between the borrowing and the lending rates, without compensating for the fact that the earning assets and the borrowed funds may be different instruments and differ in volume. The net interest margin can therefore be higher (or occasionally lower) than the net interest spread.

Fig: Net Interest Margin

Here, the data of Premier Bank suggests that it has a better earning record of net interest as opposed to that of Mutual Trust Bank. Premier Bank’s ratio has been rising and having a mean near 4 with