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The paper talks about Money U22053 Assignment -Banking and Finance analysis.So,explain the difference between Ω-Bank’s return on assets (ROA) and its return on equity ROE and how these measures of bank profitability are related.

## Money U22053 Assignment -Banking and Finance analysis

This assignment contains 7 questions. You are required to answer all questions. Answer the questions in the order numbered. The marks for each question are as indicated. Show all calculations and support all assumptions. Completed answers should be TYPE WRITTEN and submitted to the undergraduate office, Richmond Hub, by no later than 12 pm 23rd January 2020. Dr E. Dockery.

#### Money U22053 Assignment -Banking and Finance analysis

QUESTION 1: (a)(i) Explain the difference between Ω-Bank’s return on assets (ROA) and its return on equity ROE and how these measures of bank profitability are related. (ii) Ω-Bank has informed bank analysts that its ROA for the most recent financial period is 1 per cent. The industry average ROA is 1.5 per cent. Explain how ratio analysis can help the bank managers of Ω-Bank identify the reason for this discrepancy. (iii) What is the difference between the net interest margin and the spread. [3 marks]

#### Money U22053 Assignment -Banking and Finance analysis

(b) Explain why the manager of Ω-Bank would want the bank to be highly leveraged and, in turn, why Ω-Bank’s shareholders would want the bank to be less highly leveraged? [1 mark] (c) Δ-Bank has released its financial statement which indicate that the value of its assets year end is £40 billion and the value of its liabilities £36 billion. If Δ-Bank has a 2 per cent ROA, what is its ROE? [1 mark] (d) θ-Bank has £200,000,000 in assets and £20,000,000 in equity capital. (i) If θ-Bank has a 2 per cent ROA, what is its ROE? (ii) Suppose that θ-Bank’s equity capital declines to £10,000,000, while its ROA remains unchanged. What is θ-Bank’s ROE?

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