Gce Model Questions Vol1 2024 Commerce Question 9

Practice essay / theory question 9 from the 2024 Gce Model Questions Vol1 Commerce examination. This question covers Banking, Financial Ratios, Profitability Analysis, Regulatory Capital .

Gce Model Questions Vol1 2024 Commerce Essay / Theory
Topics: Banking Financial Ratios Profitability Analysis Regulatory Capital
Question 9 GCE_MODEL_QUESTIONS_VOL1 • 2024 • COMMERCE • essay

The 2023 annual report of Zenith Commercial Bank provides the following extracts (all figures in Nigerian Naira): Balance Sheet (selected items) - Total assets: 5,200,000,000 - Total liabilities: 4,800,000,000 - Shareholders’ equity (capital): 400,000,000 - Risk‑weighted assets: 3,500,000,000 Income Statement (selected items) - Interest income: 420,000,000 - Interest expense: 150,000,000 - Non‑interest income: 80,000,000 - Operating expenses (excluding interest): 200,000,000 - Loan‑loss provisions: 30,000,000 The Central Bank of Nigeria requires a minimum Capital Adequacy Ratio (CAR) of 8 %. Using the data above, answer the following.

Question Parts

( a )
Calculate the bank’s Net Interest Income (NII).
( b )
Determine the bank’s Return on Assets (ROA) for the year, expressed as a percentage to two decimal places. Use Net Profit before tax as the numerator, where Net Profit before tax = NII + Non‑interest income – Operating expenses – Loan‑loss provisions.
( c )
Compute the Capital Adequacy Ratio (CAR) and discuss how the result influences the bank’s capacity to expand its lending portfolio.
( d )
Suggest two realistic strategies the bank could adopt to improve its overall profitability without compromising regulatory capital requirements.

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About This Question

This is Gce Model Questions Vol1 2024 Commerce Question 9. It is one of the essay questions from the 2024 Gce Model Questions Vol1 Commerce examination.

The question covers Banking, Financial Ratios, Profitability Analysis, Regulatory Capital .

View More Gce Model Questions Vol1 2024 Commerce Questions More Gce Model Questions Vol1 Practice Questions Back to Questions

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