What is Deposit Growth? Deposit growth refers to the increase in the total amount of deposits that customers place with banks over a specific period. It is a vital indicator of a bank’s liquidity, customer confidence, and overall financial health. A steady rise in deposits not only supports the bank’s lending activities but also enhances…
Author: Tech Writer
Credit Growth in Banking: Trends, Formula, Impact & Key Drivers
What is Credit Growth? Credit growth refers to the increase in the total amount of loans and advances provided by banks and financial institutions over a given period. It serves as a critical indicator of economic activity, reflecting how much banks are lending to businesses, consumers, and other sectors. Strong credit growth generally signals expanding…
Capital Adequacy Ratio (CAR) in Banking: Definition, Calculation & Example
What is Capital Adequacy Ratio (CAR)? The Capital Adequacy Ratio (CAR) is a critical financial metric that measures a bank’s capital relative to its risk-weighted assets. It indicates how well a bank can absorb potential losses and maintain stability during financial stress. Regulators use CAR to ensure that banks have sufficient capital to support their…
Provision Coverage Ratio (PCR) in Banking: Definition, Calculation & Example
What is Provision Coverage Ratio (PCR)? The Provision Coverage Ratio (PCR) is a vital financial metric used by banks to assess the quality of their loan portfolios. PCR measures the extent to which a bank has made provisions to cover its non-performing assets (NPAs). Essentially, it indicates how well a bank can absorb losses from…
Net Non-Performing Assets (NNPA) Ratio in Banking: Definition, Calculation & Example
What is the NNPA Ratio? The Net Non-Performing Assets (NNPA) Ratio is a key metric used to assess a bank’s asset quality. Unlike the GNPA ratio, which measures the total non-performing assets, the NNPA ratio accounts for the bank’s provisioning against bad loans. This ratio gives investors a clearer picture of the bank’s actual credit…
Gross Non-Performing Assets (GNPA) Ratio in Banking: Understanding Its Importance, Calculation & Example
What is the GNPA Ratio? The Gross Non-Performing Assets (GNPA) Ratio is a key indicator of a bank’s asset quality. It measures the percentage of loans and advances that have turned into non-performing assets (NPAs) relative to the total loans disbursed by the bank. A high GNPA ratio signals deteriorating asset quality, while a low…
Cost to Income Ratio in Banking: A Key Efficiency Metric
What is Cost to Income Ratio? The Cost to Income Ratio (CIR) is a crucial financial metric that measures a bank’s operational efficiency. It compares the bank’s operating expenses to its net income, helping investors assess how well a bank controls costs relative to its earnings. A lower CIR indicates better efficiency, while a higher…
Return on Equity (ROE) in Banking: A Key Profitability Metric
What is Return on Equity (ROE)? Return on Equity (ROE) is a crucial financial ratio that measures how efficiently a bank generates profit from its shareholders’ equity. It helps investors assess how well a bank is using its capital to create value. A higher ROE indicates strong financial performance and effective capital utilization, while a…
Return on Assets (ROA) in Banking: A Key Profitability Metric
What is Return on Assets (ROA)? Return on Assets (ROA) is a crucial financial ratio that measures how efficiently a bank or financial institution generates profit from its total assets. It helps investors and analysts evaluate how well a bank is utilizing its resources to create earnings. A higher ROA indicates strong financial performance, while…
Net Interest Margin (NIM) in Banking: A Key Profitability Metric
What is Net Interest Margin (NIM)? Net Interest Margin (NIM) is a key profitability metric used in the banking sector. It measures the difference between the interest banks earn on loans and the interest they pay on deposits, relative to their total earning assets. A higher NIM indicates that a bank is efficiently managing its…