The ratios which will help you to review about a bank’s overall financial position are as follows:
1. Credit to Deposit Ratio
This reflects the ability of the bank to make optimal use of the available resources. How much of Loans it has given compared to the Deposit it has.
2. Capital Adequacy Ratio
It reflects whether there is adequate capital for growth of the bank. RBI has set a minimum of 9% as the CAR.
= Capital (Tier I + Tier II) / Risk Adjusted (Weighted) Assets
3. Non Performing Assets Ratio
It checks how much of nonperforming assets or assets which is not giving you any returns are there compared to the overall Average total assets.
= NPA/ Avg. Total Assets
4. Provision Coverage Ratio
It is how much of provisions have the bank made for the troubled part of its loan. If it has over protectively provided in a year then it would most probably not need to provide much in the next year.
5. Return on Assets
This ratio lets you know how much of returns are generated for the amount of assets invested.
= Net Profit/Avg. Total Assets
D.V.P
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