Question

Bank A (Dollars in Millions) Assets Liability and Equity Cash $ 850 Deposits $ 6,475 Securities 1,925 Other Borrowing 1,645 Loans 5,400 Equity 1,030 Others 975 Total $ 9,150 Total $ 9,150 Income Statement Interest income on loans $ 450 Interest income on securities 95 Interest expenses 246 Noninterest income 78 Nonincome expenses 112 Provision for loan loss 35 Taxes 115 NI $ 115 The bank's asset utilization ratio is

Answer 1

6.81%

Step-by-step explanation:

Given that,

Total assets = $9,150 million

Interest income on loans = $ 450

Interest income on securities = $95 million

Non-interest income = $78 million

The bank's asset utilization refers to the ratio of revenue and average total assets.

Bank's asset utilization ratio = Revenue ÷ Average total assets

= ($450 million + $95 million + $78 million) ÷ $9,150 million

= $623 million ÷ $9,150 million

= 0.0681 or 6.81%

The Bank's asset utilization ratio is 6.81%