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Question: exercise on ews bank abcs simplified balance sheet position in...

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Exercise on EWS Bank ABCs simplified balance sheet position (in £ million) is illustrated below: ASSETS LIABILITIES Cash Liquid Assets 50 150 800 550 Retail deposits Wholesale deposits Subordinated debt Loan Loss Reserve Equity Securities Mortgages 200 600 90 500 50 Commercial Loans TOTAL 1500 TOTAL 1500 . . . The bank interest income was £750 and interest expenses £650 The non-interest income was £620 and non-interest expenses £600 The bank expects 10 per cent of commercial loans and 5 percent of mortgages to become non-performing and provisions accordingly. a) Calculate the CAMELS ratios (at least one ratio per category) for the above bank and discuss the banks risk profile. b) Discuss the limitations of financial ratio analysis based-models to monitor banks overall safety and soundness

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