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Based on the following information about Banks A and B, compute for each the return on assets (ROA), return on equity (ROE), and leverage ratio.
a. Bank A has net profit after taxes of $1.8 million and the following balance sheet:
| Bank Balance Sheet |
| (in millions) |
| Assets | Liabilities and Capital |
| Reserves | $5 | Deposits | $100 |
| Loans | $70 | Borrowings | $10 |
| Securities | $45 | Bank Capital | $10 |
Instructions: Enter your responses rounded to two decimal places.
The return on assets (ROA) for Bank A: percent
The return on equity (ROE) for Bank A: percent
The leverage ratio for Bank A:
b. Bank B has net profit after taxes of $2 million and the following balance sheet:
| Bank Balance Sheet |
| (in millions) |
| Assets | Liabilities and Capital |
| Reserves | $10 | Deposits | $60 |
| Loans | $45 | Borrowings | $10 |
| Securities | $30 | Bank Capital | $15 |
Instructions: Enter your responses rounded to two decimal places.
The return on assets (ROA) for Bank B: percent
The return on equity (ROE) for Bank B: percent
The leverage ratio for Bank B:
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