MANILA TYTANA COLLEGES Formerly Manila Doctors College
Ban of the Phili!!ine "slands As of December 31, Financial #tate$ent 2014 Anal%sis Dan Paul C. Begas Renz Mico F. Corona Christine Angela B. Cruz Allaniah H. Maca-alin Red Christian L. Palustre Palustre
Professor Ariel Pineda Table of Contents Con tents
Pages
"ntroduction
ac!gro"#$ a#$ %&s'or( 2
) & s & o # , M & s s & o # , C o r e )a * " e s
3
Financial #tate$ent Anal%sis Pro!er
%or&+o#'a* A#a*(s&s Co#$&'&o#-
. %o r&+o #'a * A#a*( s&s I #co me)e r ' & c a * A # a * ( s & s C o # $ & ' & o # )er'&ca* A#a*(s&s I#come-
1/ a'&o A#a*(s&s
10 13
Pro'ab&*&'( 22
Le er a g e
2
L&"&$&'(
2/
Gro5'6
27
S'a'eme#' of 8&#a#c&a* A#a*(s&s 34
e c o m m e # $ a ' & o #
3
Page & of '(
"ntroduction
ac!gro"#$ a#$ %&s'or( 2
) & s & o # , M & s s & o # , C o r e )a * " e s
3
Financial #tate$ent Anal%sis Pro!er
%or&+o#'a* A#a*(s&s Co#$&'&o#-
. %o r&+o #'a * A#a*( s&s I #co me)e r ' & c a * A # a * ( s & s C o # $ & ' & o # )er'&ca* A#a*(s&s I#come-
1/ a'&o A#a*(s&s
10 13
Pro'ab&*&'( 22
Le er a g e
2
L&"&$&'(
2/
Gro5'6
27
S'a'eme#' of 8&#a#c&a* A#a*(s&s 34
e c o m m e # $ a ' & o #
3
Page & of '(
ac!gro"#$ a#$ %&s'or( 8o"#$e$ &# 191, a#! of '6e P6&*&::&#e Is*a#$s &s '6e rs' ba#! &# '6e P6&*&::&#es a#$ &# '6e So"'6eas' As&a# r eg eg &o & o #; # ; PI P I & s a " #& # & e e rs r s a* a * b a# a# ! a #$ #$ ' og o g e' e ' 6e 6 e r 5 &' & ' 6 & 's 's s "b " b s& s & $& $& ar a r &e &e s a #$ #$ a < * &a & a ''e e s, s , & ' o = er e r s a 5 &$ &$ e r a# a# ge ge o f # a # c &a &a * : ro ro $ $" " c 's ' s a # $ s o *" *" ' &o &o # #s s ' 6 a' a' s e r r e b o' o ' 6 r e' e' a &* &* a#$ cor:ora'e c*&e#'s; P I> I > s s e r r & ce ce s & # c* c* " $e $e c o #s #s " me me r b a #! #! & #g #g a # $ * e #$ #$ & #g #g , asse' ma#ageme#', &#s"ra#ce, sec"r&'&es bro!erage a#$ $ & s' s ' r &b & b "' " ' & o# o # , f o re re & g# g# e ?c ?c 6 a# a# g e, e, * e as as & #g # g , a # $ c o r: r: o ra ra ' e a#$ &#es'me#' ba#!&#g; T6 T 6 e ba # ! 6 a s a # e ' 5 o r ! o f o e r 9 0 0 b r a # c 6 e s & # ' 6 e P6&*&::&#es, %o#g @o#g a#$ E"ro:e, a#$ c*ose 'o 3,000 ATMs a#$ CDMs cas6 $e:os&' mac6&#es-; T6 T 6 e e s ' a b * & s 6 m e # ' o f P I , o r & g & # a * * ( ! # o 5 # a s E * a # c o Es:ao* 8&*&:&#o $e Isabe* II, "s6ere$ &# '6e s'ar' of '6e P 6& 6 & *& *& :: : : &# &# e b a# a # ! &# &# g a #$ #$ # a# a # ce ce & #$ #$ "s "s 'r ' r (; (; T 6e 6e b a #! #! :erforme$ ma#( f"#c'&o#s, from :ro&$&#g cre$&' 'o '6e N a' a ' &o & o #a # a * Tr e as a s "r " r ( ' o : r& r& #' # ' & #g #g a #$ #$ & ss s s "& " & #g # g c "r " r re re #c # c (, (, ma!&#g &' &# e=ec' '6e co"#'r(>s rs' Ce#'ra* a#!; PI :ro"$*( :ro"$*( carr&es carr&es o# '6&s 'ra$&'&o#, 'ra$&'&o#, #a#c&#g #a#c&#g ma#( :r&a'e a#$ :"b*&c sec'or &#&'&a'&es a#$ e#'er:r&ses &# s"::or' of eco#om&c gro5'6 a#$ #a'&o# b"&*$&#g; PI &s ac!#o5*e$ge$ as a *ea$&#g :ro&$er of #a#c&a* ser&ces &# '6e P6&*&::&#es;
)&s&o#, M&ss&o#, Core )a*"es )a*"es M&ss&o# S&#ce '6e ba#!>s fo"#$&#g 1.4 (ears ago, PI 6as bee# & #e # e ? 'r 'r &c & c ab a b *( *( * &# & # !e !e $ ' o ' 6e 6e g ro ro 5' 5' 6 o f ' 6e 6e P 6& 6& *& * & :: :: &# &# e e co c o #o # o m( m (; A #c # c 6o 6 o r& r & #g # g o "r "r & #s # s ' &' &' "' " ' &o & o # o # o "r "r f o" o " rB rB f o* o* $ c om om m& m& 'm ' m e# e# ' ' o C *& * & e# e# 's 's , P e o: o: *e *e , S 6a 6a re re 6o 6o *$ *$ er e r s, s , a #$ #$ Co"#'r(, 5e a&m 'o 'a!e a$a#'age of '6e co"#'r(>s goo$ m a c ro e c o # o m & c f"#$ame#'a*s b( c a re f " * * ( a#$ Page ) of '(
s ( s 'e 'e m a' a' & ca ca * *( *( o er er * a( a ( & #g #g s c a* a* e o er er s o me me o f ' 6 e b e s' s' #a#c&a* me'r&cs &# '6e P6&*&::&#e ba#!&#g &#$"s'r(; &#$"s'r(; O"r m&ss&o# &s e#s6r&#e$ &# '6e PI Cre$o; T6 T 6 e P I C re $ o e be*&ee o"r rs' res:o#s&b&*&'( &s 'o o"r C*&e#'s; If 5e "#$ers'a#$ a#$ a$$ress o"r c*&e#'s> #a#c&a* #ee$s, 5e 5 &* &* * b e ' r" r" s' s' e$ e$ 5 &' &' 6 ' 6e 6e &r &r m os os ' & m m: : o r 'a ' a # ' # a# a # c& c& a * 'ra#sac'&o#s, a#$ 5e 5&** b"&*$ *as'&#g re*a'&o#s6&:s; e $o 5e** 56e# o"r c*&e#'s $o 5e**; e be*&ee &# o"r res:o#s&b&*&'( 'o o"r Peo:*e; e see! 'o 6&re 6&re '6e bes' :eo:*e for eac6 ob, :ro&$e :ro&$e '6em 5&'6 '6e mea#s 'o :erform a' a 6&g6 *ee* a#$ re5ar$ '6em fa&r*(; e a* a * "e " e & #' #' eg e g r& r & '( ' ( , : ro ro fe f e ss s s & o# o# a* a * &s & s m, m , a #$ # $ * o( o ( a* a * '( ' (; e : ro ro mo mo 'e 'e a c "* "* '" ' " re re o f m "' "' "a "a * r e s: s : ec ec ', ' , m er er &' &' oc o c ra ra c( c( , : e r f or or m a # c e , a # $ ' e a m 5 o r ! ; e s ' r & e ' o b e ' 6 e em:*o(e r of c6o&ce amo# g P6&*&::&#e #a #a#c&a* &#s'&'"'&o#s; e be*&ee &# o"r res:o#s&b&*&'( 'o o"r S6are6o*$ers; e ' re re a' a' c a: a: &' &' a* a * a s a m os os ' a* a* "a "a b* b * e a ss s s e' e' , a #$ #$ s ee ee ! ' o g e #e #e r a' a' e s " :e :e r &o &o r r e' e' " r# r# s 5 6 6&& * e b e &# &# g : r "$ "$ e #' #' & # r & s! s! 'a!&#g, s:e#$&#g, a#$ &#es'me#'; e b e* e * &e & e e e & # o "r " r r es es :o : o #s # s &b & b &* & * &' &' ( :ros:er&'( &s grea'*( $e:e#$e#' o# #a'&o#; e a&m 'o be &#c*"s&e a#$ b"&*$&#g; T6ro"g6 PI 8o"#$a'&o#, ' 6 e 5 e *f *f a re re a # $ s " s' s ' a &# &# a b& b& * &' &' ( o f sere;
' o o "r " r C o" o " #' #' r( r (; O "r "r '6e 5e**Bbe&#g of o"r res:o#s&b*e &# #a'&o# 5e are comm&''e$ 'o ' 6 e c o mm mm " #& #& ' &e &e s 5 e
)&s&o# I' &s PI>s &s&o# 'o be '6e P6&*&::&#es> :rem&er ba#! '6a' b"&*$s o# &'s 6er&'age of be&#g '6e :r&#c&:a* arc6&'ec' of '6e co"#'r(>s #a#c&a* &#c*"s&o# *a#$sca:e, :ro&$&#g '6e mos' e= ec'&e, ec'&e, e< c&e#', c&e#', a#$ &##oa'& &##oa'&e e so*"'&o#s for &'s c *& * & e# e# 's ' s ' o b es es ' m a# a# ag a g e ' 6e 6e &r &r # a# a # c& c& a* a * # ee ee $s $s , 5 6& 6& *e *e crea'&#g s"s'a&#ab*e a*"e a#$ s6are$ :ros:er&'( for a** s'a!e6o*$ers;
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Core )a*"es CSTOME SE)ICE Es'ab*&s6 fr&e#$*( re*a'&o#s6&:s 5&'6 c*&e#'s, :"''&#g '6em r s ' & # o "r * &s ' o f : r& or &' &e s, ' o $ e* &g 6' ' 6e m 5 &' 6 o "r s e r &c es , a #$ ' o a *5 a( s ' r( ' o a #' &c &: a' e ' 6e &r e e r( #ee$; EFCELLENCE Em:*o(ees, 56a'eer '6e&r f"#c'&o#s are, s6o"*$ a*5a(s g&e '6e&r bes' a#$ co#'&#"o"s*( ":gra$e '6e&r ! # o5 * e$ ge , s ! &* * s, 6 a b& ' s, a # $ a ' '& ' "$ e s ' o m e e' e a c6 c 6a* *e# ge 5 &'6 $ e' erm &#a '& o# a# $ $r &e , o:e #&# g '6emse*es 'o "#*&m&'e$ :oss&b&*&'&es; LOYALTY To be :ro "$ of PI, 'o be 'r"e 'o &'s &$ea*s a#$ &s&o#, a#$ 'o ac'&e*( :romo'e a#$ $efe#$ 56a' PI s'a#$s for; TEAMO@ "&*$ $ee: a#$ *as'&#g re*a'&o#s6&:s fo"#$e$ o# 'r"s' a#$ res:ec', 'o be 'o'a**( comm&''e$ 'o '6e ac6&eeme#' of ' 6e ob e c' & es of o" r ' ea m a #$ of PI , ' o ac '& e* ( :ar'&c&:a'e as o#e &# a#( "#$er'a!&#g, 'o co#'r&b"'e o"r &#$&&$"a* !#o5*e$ge a#$ 'a*e#'s for '6e be#e ' of a**; INTEGITY As ba#!ers, 5e s6o"*$ be 5or'6( of '6e co# $e#ce :"' &# "s b( PI a#$ '6e soc&e'( &' s'a#$s for, ear# '6e 'r"s' of '6ose 5e mee' a#$ &#'erac' 5&'6, a#$ a*5a(s $o 56a' &s mora**(, a#$ soc&a**( correc', co#'r&b"'&#g &# o"r sma** 5a( &# s6a:&#g '6e f"'"re; CONCEN 8O PEOPLE Em:*o(ees s6o"*$ be ge#"&#e*( &#'eres'e$ &# :eo:*e, 'o 6 e* : o '6 er s & # e e r( 5 a( : os s &b *e , ' o c o# 'r &b "' e ' o a s o" #$ e # &ro #m e# ', ' o b e f a& r, s ": :o r' & e, f r& e# $* (, car&#g, a#$ s&#cere &# o"r re*a'&o#s 5&'6 '6e :eo:*e 5e mee';
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Ban of the Phili!!ine "slands Financial #tate$ent Anal%sis As of December 31, 2014
%or&+o#'a* A#a*(s&s S'a'eme#' of Co#$&'&o#BANK OF THE PHILIPPINE ISLANDS STATEMENT OF CONDITION HORIZONTAL ANALYSIS (In Millions of Pesos) ASSETS CASH AND OTHER CASH ITEMS DUE FROM BANGKO SENTRAL NG PILIPINAS DUE FROM OTHER BANKS INTERBANK LOANS RECEI#ABLE AND SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL FINANCIAL ASSETS AT FAIR #ALUE THROUGH PROFIT OR LOSS $ DERI#ATI#E FINANCIAL ASSETS TRADING SECURITIES A#AILABLE$FOR$SALE SECURITIES, NET HELD$TO$MATURIT% SECURITIES LOANS AND AD#ANCES, NET ASSETS HELD FOR SALE, NET BANK PREMISES, FURNITURE, FI&TURES AND E'UIPMENT, NET IN#ESTMENT PROPERTIES, NET IN#ESTMENTS IN SUBSIDIARIES AND ASSOCIATES, NET ASSETS ATTRIBUTABLE TO INSURANCE OPERATIONS DEFERRED INCOME TA& ASSETS, NET OTHER RESOURCES, NET TOTAL ASSETS
20!
20"
INCREASE (DECREASE)
#
38,427 211,946 22,227
25,696 244,483 17,"7"
12,731 32,537! 5,157
49.54 13.31! 3".21
5,782
17,397
11,615!
66.76!
35,981 15,862 51,3"9 2"9,4"9 8"",17" 5,"18
16,55" 4,597 87,556 96,172 63",2"3 5,852
19,431 11,265 36,247! 113,237 169,997 834!
117.41 245."5 41.4"! 117.74 26.97 14.25!
12,76"
12,2"5
555
4.55
8"8
1,597
789!
49.41!
4,784
4,176
6"8
14.56
16,445 5,718 13,551 $!%0$&'
14,586 6,176 11,"48 $&%$"!
1,859 458! 2,5"3 2%!$""
12.75 7.42! 22.66 2*"2
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LIABILITIES AND CAPITAL F+NDS DEPOSIT LIABILITIES DERI#ATI#E FINANCIAL LIABILITIES BILLS PA%ABLE DUE TO BANGKO SENTRAL NG PILIPINAS AND OTHER BANKS MANAGER(S CHECKS ) DEMAND DRAFTS OUTSTANDING ACCRUED TA&ES, INTEREST ) OTHER E&PENSES LIABILLITIES ATTRIBUTABLE TO INSURANCE OPERATIONS DEFERRED ) OTHER LIABILITIES TOTAL LIABILITIES SHARE CAPITAL SHARE PREMIUM RESER#ES SURPLUS ACCUMULATED OTHER COMPREHENSI#E LOSS! INCOME CAPITAL F+NDS ATTRIB+TABLE TO THE CAPITAL F+NDS HOLDERS OF BPI NON,CONTROLLIN- INTERESTS TOTAL CAPITAL F+NDS TOTAL LIABILITIES AND CAPITAL F+NDS
20!
20"
INCREASE (DECREASE)
#
1,176,213 34,846 32,993
988,586 16,36" 26,179
187,627 18,486 6,814
18.98 113."" 26."3
687
2,"51
1,364!
66.5"!
8,353
7,183
1,17"
16.29
5,597
4,9"7
69"
14."6
13,561
13,"61
5""
3.83
31,268 $"0"$% 39,272 29,341 2,"98 76,575
31,23" $0&$%%' 35,563 8,316 1,68" 62,137
38 2"$& 3,7"9 21,"25 418 14,438
".12 &*! 1".43 252.83 24.88 23.24
3,223!
3,161!
62!
1.96
144,"63
1"4,535
39,528
37.81
2,616 !$'& $!%0$&'
1,272 0%$0' $&%$"!
1,344 !0$'2 2%!$""
1"5.66 "*" 2*"2
eso"rces To'a* reso"rces e#$e$ a' P1;4 'r&**&o#, a# amo"#' 56&c6 re:rese#'e$ a# &#crease of P2 b&**&o# or 21;3, from P1;2 'r&**&o# :os'e$ *as' (ear; Loa#s a#$ a$a#ces, #e' gre5 b( P1/0;0 b&**&o#, or 2/, $r&e# b( *oa# $ema#$ from cor:ora'e a#$ re'a&* c*&e#'s; %e*$B'oBma'"r&'( sec"r&'&es &#crease$ b( P113;2 b&**&o#, or 11/;/, $"e 'o a$$&'&o#a* &#es'me#'s a#$ '6e rec*ass&ca'&o# of cer'a&# aa&*ab*eBforBsa*e sec"r&'&es 'o %TM $"e 'o c6a#ge &# &#'e#'&o#; Der&a'&e #a#c&a* asse's a*so 5e#' ": b( P17;4 b&**&o#, or 11/;4, $"e 'o 6&g6er mar!e' a*"a'&o# of cer'a&# $er&a'&e :ro$"c's; Cas6 a#$ o'6er cas6 I'ems 5ere ": b( P12;/ b&**&o#, or 47;, $"e 'o 6&g6er cas6 re"&reme#' '6&s :er&o$ ers"s (eare#$ 2013; Tra$&#g sec"r&'&es e?:a#$e$ b( P11;3 b&**&o#, or 24;1, o# &#crease$ 6o*$&#gs of *oca* bo#$s &#'e#$e$ for 'ra$&#g; Page , of '(
D"e from o'6er ba#!s rose b( P;2 b&**&o#, or 30;2, o# 6&g6er 5or!&#g ba*a#ces a#$ :*aceme#'s ma&#'a&#e$ 5&'6 corres:o#$e#' ba#!s; O'6er reso"rces, #e' reHec'e$ a# &#crease of P2; b&**&o#, or 22;/, o# 6&g6er acco"#'s rece&ab*e a#$ m&sce**a#eo"s asse's; Asse's a''r&b"'ab*e 'o &#s"ra#ce o:era'&o#s &#crease$ b( P1;7 b&**&o#, or 12;9, $"e 'o '6e a#!>s #o#B*&fe &#s"ra#ce s"bs&$&ar(s 6&g6er sec"r&'&es &#es'me#'s a#$ gross :rem&"ms 5r&''e#; I#es'me#'s &# s"bs&$&ar&es a#$ assoc&a'es, #e' &#crease$ P.09 m&**&o#, or 14;., o# &m:roe$ &#come of '6e a#!>s ass"ra#ce a<*&a'e; Aa&*ab*eBforBsa*e sec"r&'&es, #e' $ec*&#e$ b( P3.;2 b&**&o#, or 41;4, $"e 'o rec*ass&ca'&o# of cer'a&# A8S 'o %TM ca'egor( $"e 'o c6a#ge &# &#'e#'&o#; D"e from a#g!o Se#'ra* #g P&*&:&#as $ecrease$ b( P32; b&**&o#, or 13;3, $"e 'o *o5er s:ec&a* $e:os&' acco"#' 5&'6 '6e SP; I#'erba#! *oa#s rece&ab*e a#$ sec"r&'&es :"rc6ase$ "#$er agreeme#'s 'o rese** $ec*&#e$ b( P11;. b&**&o#, or ..;9, $"e 'o a $ec*&#e &# P o*"me :ar'&a**( o=se' b( s*&g6'*( 6&g6er &#'erba#! 'erm *oa#s; Asse's 6e*$ for sa*e, #e' $ec*&#e$ b( P934 m&**&o#, or 14;3, o# '6e co#'&#"e$ se** $o5# of forec*ose$ asse's; I#es'me#' :ro:er'&es, #e' $ro::e$ b( P/97 m&**&o#, or 47;4 $"e 'o sa*e of a cer'a&# a#! :ro:er'(; Deferre$ &#come 'a? asse's, #e' $ec*&#e$ b( P49 m&**&o#, or /;4 $"e 'o '6e DIT o# mar! 'o mar!e' ga&#s *as' (ear as aga&#s' #&* '6&s (ear;
L&ab&*&'&es To'a* $e:os&'s e?:a#$e$ b( P19/;. b&***o# or 17;0 $"e 'o ba*a#ces gro5'6 &# sa&#gs, '&me, a#$ $ema#$ $e:os&'s of P110;7 b&**&o#, or 21;7, P.;/ b&**&o#, or 19;/, a#$ P20;0 b&**&o#, or 11;1, res:ec'&e*(;
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Der&a'&e #a#c&a* *&ab&*&'&es gre5 P19; b&**&o# or 113;0 $"e 'o 6&g6er mar!e' a*"a'&o# of cer'a&# $er&a'&e :ro$"c's; &**s :a(ab*e &#crease$ b( P.;9 b&**&o# or 2.;0, o# 6&g6er e?'er#a* borro5&#gs; Ma#agers c6ec!s a#$ $ema#$ $raf's o"'s'a#$&#g *&!e5&se gre5 b( P1;2 b&**&o# or 1.;3 o# 6&g6er #o#B#ego'&a'e$ ma#ager>s c6ec!s &ss"e$; Accr"e$ 'a?es, &#'eres' a#$ o'6er e?:e#ses rose b( P.70 m&**&o# or 14;1, o# 6&g6er accr"a* o# 'a?es a#$ *&ce#ses, a#$ &#'eres' ra'es o# #o#B$e*&erab*es s5a:s; D"e 'o a#g!o Se#'ra* #g P&*&:&#as SP- a#$ o'6er ba#!s $ec*&#e$ b( P14 b&**&o#, or ..; $"e 'o '6e c6a#ge &# '6e 'a? co**ec'&o# rem&''a#ce a re$"c'&o# &# Hoa' from 10 $a(s for oerB'6eBco"#'er, a#$ $a(s, &f $o#e '6r" e*ec'ro#&c &#'er#e' c6a##e*s from co**ec'&o# $a'e, 'o #e?' ba#!&#g $a( rem&''a#ce for bo'6-;
Ca:&'a* 8"#$s Ca:&'a* 8"#$s e?:a#$e$ b( P37; b&**&o#, or 3/;9 'o P144;1 b&**&o#, from (earBe#$ 2013; S6are :rem&"m a#$ s6are ca:&'a* reHec'e$ &#creases of P21;0 b&**&o#, or 22;9, a#$ P3;/ b&**&o#, or 10;4, res:ec'&e*(, *arge*( $"e 'o '6e P2 b&**&o# s'oc! r&g6's &ss"e$ &# 8ebr"ar( 2014; S"r:*"s *&!e5&se co#'r&b"'e$ 'o '6e ca:&'a* gro5'6 b( P14;4 b&**&o#, or 23;2, as a res"*' of acc"m"*a'e$ :ro's #e' of cas6 $&&$e#$ :a(me#'s; eseres 5ere ": b( P419 m&**&o#, or 24;7, o# 6&g6er :ro&s&o# 'or 'r"s' b"s&#ess a#$ &#es'me#' 6o"se; No#Bco#'ro**&#g I#'eres's a' P2;. b&**&o# gre5 P1;3 b&**&o#, or 10;/, *arge*( $"e 'o '6e a#!>s *eas&#g s"bs&$&ar(s o&#' e#'"re 5&'6 Ce#'"r( To!(o Leas&#g, 56ere&# '6e a#! re'a&#e$ 1 o5#ers6&:, a#$ &# :ar' $"e 'o a$$&'&o#a* ca:&'a* boo!e$ b( '6e a#!>s m&cro#a#ce a<*&a'e;
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%or&+o#'a* A#a*(s&s S'a'eme#' of I#comeBANK OF THE PHILIPPINE ISLANDS STATEMENT OF INCOME HORIZONTAL ANALYSIS (In Millions of Pesos) ACCO+NTS INTEREST INCOME O* +-* -*/ -/0-* O* +/$$- O* -0-+-:+$;$-+ O* /< = BSP -*/ :-*> O* -/*? G < -@ INTEREST E&PENSE O* /< O* :++ <--:+ ) :=*? NET INTEREST INCOME IMPAIRMENT LOSSES NET INTEREST INCOME AFTER IMPAIRMENT LOSSES OTHER INCOME T-/*? ?-* * F ) C* I* ; ;?* @-*? -/*? I* -:-:+ *-* <-* O <-*? * G < -@
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OTHER E&PENSES C<*-* -*/ ;*? :*; O<-* -*/ <*$+-/ @<* O <-*? @<* INCOME BEFORE INCOME TA& PRO#ISION FOR INCOME TA& C* D;/ NET INCOME FOR THE YEAR
2&$&0 11,85" 9,"17 9,"93 2"$020
2$'0" 1",641 8,"4" 8,"22 2"$!'
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e?:ose$ 'o or$&#ar( cor:ora'e &#come 'a?; Deferre$ &#come 'a? 5as P422 m&**&o# *o5er o# acco"#' of '6e &m:a&rme#' *osses se' ": for '6e (ear, a#$ acco"#'s 5&'6 '&m&#g $&=ere#ce;
)er'&ca* A#a*(s&s S'a'eme#' of Co#$&'&o#BANK OF THE PHILIPPINE ISLANDS STATEMENT OF CONDITION .ERTICAL ANALYSIS (In Millions of Pesos) ASSETS CASH AND OTHER CASH ITEMS DUE FROM BANGKO SENTRAL NG PILIPINAS DUE FROM OTHER BANKS INTERBANK LOANS RECEI#ABLE AND SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL FINANCIAL ASSETS AT FAIR #ALUE THROUGH PROFIT OR LOSS $ DERI#ATI#E FINANCIAL ASSETS $ TRADING SECURITIES A#AILABLE$FOR$SALE SECURITIES, NET HELD$TO$MATURIT% SECURITIES LOANS AND AD#ANCES, NET ASSETS HELD FOR SALE, NET
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38,427 211,946 22,227
2.65 14.61 1.53
25,696 244,483 17,"7"
2.15 2".45 1.43
5,782
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17,397
1."4
35,981 15,862
2.48 1."9
16,55" 4,597
1.38 ".38
51,3"9 2"9,4"9 8"",17" 5,"18
3.54 14.44 55.18 ".35
87,556 96,172 63",2"3 5,852
7.32 8."5 53.14 ".5"
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BANK PREMISES, FURNITURE, FI&TURES AND E'UIPMENT, NET IN#ESTMENT PROPERTIES, NET IN#ESTMENTS IN SUBSIDIARIES AND ASSOCIATES, NET ASSETS ATTRIBUTABLE TO INSURANCE OPERATIONS DEFERRED INCOME TA& ASSETS, NET OTHER RESOURCES, NET TOTAL ASSETS
LIABILITIES AND CAPITAL F+NDS DEPOSIT LIABILITIES DERI#ATI#E FINANCIAL LIABILITIES BILLS PA%ABLE DUE TO BANGKO SENTRAL NG PILIPINAS AND OTHER BANKS MANAGER(S CHECKS ) DEMAND DRAFTS OUTSTANDING ACCRUED TA&ES, INTEREST ) OTHER E&PENSES LIABILLITIES ATTRIBUTABLE TO INSURANCE OPERATIONS DEFERRED ) OTHER LIABILITIES TOTAL LIABILITIES SHARE CAPITAL SHARE PREMIUM RESER#ES SURPLUS ACCUMULATED OTHER COMPREHENSI#E LOSS! INCOME CAPITAL F+NDS ATTRIB+TABLE TO THE CAPITAL F+NDS HOLDERS OF BPI NON,CONTROLLIN- INTERESTS TOTAL CAPITAL F+NDS TOTAL LIABILITIES AND CAPITAL F+NDS
12,76"
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12,2"5
1."2
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20!
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O* +-* -*/ -/0-* O* +/$$- O* -0-+-:+$;$-+ O* /< = BSP -*/ :-*> O* -/*? G < -@
INTEREST E&PENSE O* /< O* :++ <--:+ ) :=*? NET INTEREST INCOME IMPAIRMENT LOSSES NET INTEREST INCOME AFTER IMPAIRMENT LOSSES OTHER INCOME T-/*? ?-* * F ) C* I* ; ;?* @-*? -/*? I* -:-:+ *-* <-* O <-*? * G < -@
OTHER E&PENSES C<*-* -*/ ;*? :*; O<-* -*/ <*$+-/ @<* O <-*? @<* INCOME BEFORE INCOME TA& PRO#ISION FOR INCOME TA& C* D;/ NET INCOME FOR THE YEAR
S1eol3es of BPI Non,4on5ollin6 in5ees5s
36,441 8,141 831 1,769 4"6 1,596! $! 1",834 35" "!$0 2$0' "2$00 20$&'& 1,362 7,37" 2,""7 1,""7 1",668 1,435! 2&$&0 11,85" 9,"17 9,"93 2"$020 !$&% 5,374 416! $02 $0"& 2"
79.23 17.7" ".57 1.21 ".28 1."9! 2!*"2 96.87 3.33 '%* *0 &*% !%* 6.49 35.33 9.57 4.8" 5".85 6.84! %*! 33.55 3".1" 3".35 %0*0% 0*'
"&*2' "&*2 0*0
32,698 4,93" 2,615 1,641 69" 1,442! 0$!' 9,53" 948 "0$"2! 2$! 2'$' 22$'! 4,839 5,885 2,"42 1,449 9,514 1,555! 2$'0" 1",641 8,"4" 8,"22 23,147 !$%" 4,147 6 $&&! $ "
8".14 12."8 6.41 4."2 1.69 3.53 ! 2%* 9".95 9."5 '!*"2 *!& '*" %!*2 21.82 26.54 9.21 6.53 42.91 7."1 ! %*!% 39.85 3".11 3"."4 %* 0*
!*! !*0" 0*!%
// , Perce#'ages
are base$ from '6e aggrega'e acco"#' com:r&se$ b( :ar's of '6a' acco"#' e;g; I#'eres' e?:e#se o# $e:os&', 7.;9/, are com:"'e$ from aggrega'e I#'eres' e?:e#se, #o' aggrega'e I#'eres' &#come;
Ne' &#come 8or '6e :re&o"s (ear, Ca:&'a* f"#$s 6o*$ers of PI 6ae 6&g6er :erce#'age of Ne' &#come com:are$ 'o No#Bco#'ro**&#g &#'eres's, 77;04 a#$ ;7., res:ec'&e*(; %o5eer, for '6e c"rre#' (ear, No#Bco#'ro**&#g &#'eres' ee# *oses :ar' of '6e :&e, res"*'&#g 'o 77;9/ a#$ ;13, res:ec'&e*(; Ne' &#come 5as 4.; for '6e :re&o"s (ear, $ec*&#e$ :ar' of '6e :&e $"r&#g '6e c"rre#' (ear 'o 37;2/ of '6e 'o'a* &#'eres' &#come of '6e res:ec'&e (ears; To a$$, '6e $ec*&#e$ 5as o=se', 56e# '6e com:a#( &s aboe &#$"s'r(
Page / of '(
aerage, 40;1 a#$ 33;29, for '6e :re&o"s (ear a#$ c"rre#' (ear, res:ec'&e*(;
I#'eres' &#come a#$ e?:e#ses 8or '6e :re&o"s (ear, &#'eres' &#come 5as $&s'r&b"'e$ as Ne' &#'eres' &#come a#$ &#'eres' e?:e#se, /4;32 a#$ 2;.9, res:ec'&e*(; %o5eer, for '6e c"rre#' (ear, Ne' &#come ga&#e$ :erce#'age, /;.9 a#$ 24;32, res:ec'&e*(; Ne' &#'eres' &#come &s '6e same as gross :ro' for a ba#!B'(:e of cor:ora'&o#; T6erefore, :erce#'age of gross :ro' &#creases, 56&c6 &s a goo$ s&g# of #a#c&a* :erforma#ce; To a$$, '6e com:a#( &s *arge*( be*o5 '6e &#$"s'r( aerage for Ne' &#'eres' &#come a#$ aboe for I#'eres' e?:e#se, /4;7 a#$ 24;74, for '6e :re&o"sJ a#$ /9;09 a#$ 21;92 for c"rre#' (ear, res:ec'&e*(; T6&s co#'r&b"'es 'o '6e Ne' &#come re:or'e$ for '6e (ear, a*'6o"g6 com:are$ 'o :re&o"s (ear &s m"c6 sma**er b( 4;71;
I#'eres' &#come 8or '6e :re&o"s (ear, I#'eres' o# *oa#s a#$ a$a#ces, 6as '6e 6&g6es' :erce#'age, 90;14, amo#g '6e $&s'r&b"'&o# of &#'eres' &#come; Ne?' are I#'eres' o# 6e*$B'oBma'"r&'( sec"r&'&es, aa&*ab*eB forBsa*e sec"r&'&es, $e:os&'s 5&'6 SP a#$ o'6er ba#!s, Gross rece&:'s 'a?, I#'eres' o# 'ra$&#g sec"r&'&es, 6ae 12;09, .;41, 4;02, 3;3 o=se' #ega'&e*(-, a#$ 1;.7, res:ec'&e*(; %o5eer, I#'eres' o# *oa#s a#$ a$a#ces, 6as '6e 6&g6es' :erce#'age, /7;23, amo#g '6e $&s'r&b"'&o# of &#'eres' &#come; Ne?' are I#'eres' o# 6e*$B'oBma'"r&'( sec"r&'&es, 56&*e #e?' '6ree acco"#'s c6a#ge$ :*aces from :re&o"s (ears ra#!&#g, $e:os&'s 5&'6 SP a#$ o'6er ba#!s, Gross rece&:'s 'a?, aa&*ab*eBforBsa*e sec"r&'&es, &#'eres' o# a#$ 'ra$&#g sec"r&'&es, 6ae 1/;/0, 3;9, 3;4/ o=se' #ega'&e*(-, 1;91, a#$ ;99, res:ec'&e*(;
I#'eres' e?:e#ses 8or '6e :re&o"s (ear, I#'eres' e?:e#se o# $e:os&'s 6ae 6&g6er :erce#'age amo#g '6e $&s'r&b"'&o# of &#'eres' e?:e#se com:are$ 'o I#'eres' e?:e#se o# b&**s :a(ab*e a#$ o'6er borro5&#gs, 70;7 a#$ 7;0, res:ec'&e*(; %o5eer, for '6e c"rre#' (ear, I#'eres' o# $e:os&'s ga&#e$ :erce#'age, res"*'&#g 'o 7.;9/ a#$ 3;13, res:ec'&e*(; Page / of '(
O'6er &#come a#$ e?:e#ses O'6er &#come a#$ e?:e#ses for a ba#!B'(:e of cor:ora'&o# &s '6e same as o:era'&#g &#come a#$ e?:e#se for a ma#"fac'"r&#g '(:e of cor:ora'&o#;
O'6er &#come 8or '6e :re&o"s (ear, O'6er o:era'&#g &#come 6as '6e 6&g6es' :erce#'age 42;71, amo#g '6e $&s'r&b"'&o# of o'6er &#come; Ne?' are 8ees a#$ comm&ss&o#, Tra$&#g ga&#s o# sec"r&'&es, I#come from fore&g# e?c6a#ge 'ra$&#g, Gross rece&:' 'a?, I#come a''r&b"'ab*e 'o &#s"ra#ce o:era'&o#s, 6ae 2.;4, 21;92, 7;21, /;01 o=se' #ega'&e*(-, a#$ .;3, res:ec'&e*(; %o5eer, for '6e c"rre#' (ear, O'6er o:era'&#g &#come ma&#'a&#e$ a#$ ga&#e$ &'s 6&g6es' :erce#'age, 0;9, amo#g '6e $&s'r&b"'&o# of o'6er &#come; Ne?' are 8ees a#$ comm&ss&o#, 5&'6 '6e #e?' '6ree acco"#'s c6a#ge$ :*aces, I#come from fore&g# e?c6a#ge 'ra$&#g, Gross rece&:'s 'a?, Tra$&#g ga&#s o# sec"r&'&es, I#come a''r&b"'ab*e 'o &#s"ra#ce o:era'&o#s, 6ae 3;13, 7;/, .;94o=se' #ega'&e*(-, .;47, a#$ 4;9, res:ec'&e*(; To a$$, '6e com:a#( &s aboe '6e &#$"s'r( aerage, 49;17 a#$ 3;49, for '6e :re&o"s a#$ c"rre#' (ear, res:ec'&e*(; T6e o'6er &#come 5as 4;29 a#$ 4;.1 of 'o'a* &#'eres' &#come for :re&o"s a#$ c"rre#' (ear, res:ec'&e*(;
O'6er e?:e#se 8or '6e :re&o"s (ear, Com:e#sa'&o# a#$ fr&#ge be#e's, 6as '6e 6&g6es' :erce#'age, 37;9, amo#g '6e $&s'r&b"'&o# of o'6er e?:e#se; Ne?' are Occ":a#c( a#$ e"&:me#'Bre*a'e$ e?:e#se a#$ o'6er o:era'&#g e?:e#ses, 6ae 30;11 a#$ 30;04, res:ec'&e*(; %o5eer, for '6e c"rre#' (ear, Com:e#sa'&o# a#$ fr&#ge be#e's, *ose :ar' b"' ma&#'a&#e$ '6e 6&g6es' :erce#'age, 37;, amo#g '6e $&s'r&b"'&o# of o'6er e?:e#se; Ne?', '6e '5o acco"#'s c6a#ge$ :*aces, O'6er o:era'&#g e?:e#ses a#$ Occ":a#c( a#$ e"&:me#'B re*a'e$ e?:e#ses, 6ae 30;3 a#$ 30;10, res:ec'&e*(;
Page &( of '(
To a$$, '6e com:a#( &s be*o5 '6e &#$"s'r( aerage, /4;9/ a#$ /0;73, for '6e :re&o"s a#$ c"rre#' (ear, res:ec'&e*(; T6e o'6er e?:e#ses 5as .;4 a#$ .;14 of 'o'a* &#'eres' &#come for :re&o"s a#$ c"rre#' (ear, res:ec'&e*(; T6&s m&g6' be '6e reaso# 56( '6e com:a#(s #e' &#come 5as some6o5 *esse#;
Im:a&rme#' *osses 8or '6e :re&o"s (ear, Ne' &#'eres' &#come 5as $&s'r&b"'e$ be'5ee# Im:a&rme#' *osses a#$ Ne' &#'eres' &#come af'er &m:a&rme#' *osses, 9;/3 a#$ 71;2/, res:ec'&e*(; %o5eer, Ne' &#'eres' &#come af'er &m:a&rme#' *osses ga&#e$ :erce#'age, from Im:a&rme#' *osses, res"*'&#g 'o 71;74 a#$ 9;0., res:ec'&e*(;
I#come Ta? 8or '6e :re&o"s (ear, I#come before &#come 'a? 5as $&s'r&b"'e$ be'5ee# Pro&s&o# for &#come 'a? a#$ Ne' &#come for '6e (ear, 1/;74 a#$ 92;0., res:ec'&e*(; %o5eer, for '6e c"rre#' (ear, Pro&s&o# for &#come 'a? ga&#e$ :erce#'age, from I#'eres' &#come for '6e (ear, res"*'&#g 'o /9;4. a#$ 21;4, res:ec'&e*(; To a$$, '6e com:a#( &s be*o5 '6e &#$"s'r( aerage for Ne' &#come for '6e (ear a#$ aboe for Pro&s&o# for &#come 'a?, 93;.. a#$ 1.;33, res:ec'&e*(, for '6e :re&o"s (earJ a#$ be*o5 for Ne' &#come for '6e (ear, a#$ aboe for Pro&s&o# for &#come 'a?, 92;2/ a#$ 1/;/3, res:ec'&e*(, for '6e c"rre#' (earJ '6e :re&o"s (ears ba$ :erforma#ce 5as reHec'e$ ": 'o '6e c"rre#' (ears :erforma#ce; KKI#$"s'r( aerages 5ere a$"s'e$ 'o comfor' 5&'6 PIs S'a'eme#' of I#come :rese#'a'&o#; KKKase$ from PI ma#ageme#'s :rese#'a'&o# #o' '6e same as '6e o#e g&e# b( SP &# '6e&r a#!&#g S(s'em S'a'&s'&cs;
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a'&o A#a*(s&s KKKK CLASS OF RATIO Sol7en48
D: R- D: C-<-+ ;*/ C-<-+ ;*/ R-
COMP+TED
2"13
2"14
2"13
2"14
91.49
89.88
88.7
87.77
784.85
717.43
11.3
12.23
1"29.76 8.85
888.6 9 1".11
COMP+TED Pofi519ili58
R* * A R* * C-<-+ ;*/ C * I* NIITOI N I* M-?*
C- -*/ D ; B-*> D< L/ A D< L-* G D<
FORM+LAS
T-+ +-:+T-+ R T-+ +-:+T-+ C-<-+ ;*/ T-+ -<-+ ;*/ T-+
IND+STRY A.ERA-E
2"13
2"14
2"13
2"14
1.87
1.44
1.6
1.3
18.1
13.8
13.3
1".8
5".86
51.85
6".6
62.3
42.24
37.6
38.7
31.2
3.32
3."3
3.3
3.3
COMP+TED Li:;i3i58
IND+STRY A.ERA-E
N *A0-? -+ N * A0-? -+ -<-+ ;*/ N*$* @<* T-+ <-*? * N * * T-+ <-*? * N * * T-+ -**? -
IND+STRY A.ERA-E
2"13
2"14
2"13
2"14
29."6
23.18
33.5
29
51.54
5".24
55.6
59.5
65.11
69.15
64.3
68
C- -*/ / ; :-*>D< +-:+ T-+ +/ -D< +-:+ L-*, ? D< +-:+
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COMP+TED -o<5
IND+STRY
FORM+LAS
A.ERA-E
2"13
2"14
2"13
2"14 E-**? -0-+-:+ /*-
D+/! E-**? < S-
5.19
4.62
D0/*/ P- R-
3".51
38.96
D0/*/ < S-
1."2
1.8"
D0/*/ %+/ R-
1.91
2.15
B> #-+ < S-
".""4
6.75
36.84
-+/ A0-? -+/ -*/*? D0/*/ < -E-**? < - D0/*/ <-/ O/*- - -*/*? D0/*/ < - M->
2.12
0-+ < - ; /*- - C-<-+ ;*/ A0-? - -*/*?
Pro'ab&*&'( a'&os L&!e a** b"s&#esses, ba#!s :ro' b( ear#&#g more mo#e( '6a# 56a' '6e( :a( &# e?:e#ses; T6e maor :or'&o# of a ba#!>s :ro' comes from '6e fees '6a' &' c6arges for &'s ser&ces a#$ '6e &#'eres' '6a' &' ear#s o# &'s reso"rces; I's maor e?:e#se &s '6e &#'eres' :a&$ o# &'s *&ab&*&'&es; T6e maor reso"rces of a ba#! are &'s *oa#s 'o &#$&&$"a*s, b"s&#esses, a#$ o'6er orga#&+a'&o#s a#$ '6e sec"r&'&es '6a' &' 6o*$s, 56&*e &'s maor *&ab&*&'&es are &'s $e:os&'s a#$ '6e mo#e( '6a' &' borro5s, e&'6er from o'6er ba#!s or b( se**&#g commerc&a* :a:er &# '6e mo#e( mar!e'; eso"rces are "se$ b( b"s&#esses 'o ge#era'e &#come; Loa#s a#$ sec"r&'&es are a ba#!>s reso"rces a#$ are "se$ 'o :ro&$e mos' of a ba#!>s &#come; %o5eer, 'o ma!e *oa#s a#$ 'o b"( sec"r&'&es, a ba#! m"s' 6ae mo#e(, 56&c6 comes :r&mar&*( from '6e ba#!>s o5#ers &# '6e form of ba#! ca:&'a*, from $e:os&'ors, a#$ from mo#e( '6a' &' borro5s from o'6er ba#!s or b( se**&#g $eb' sec"r&'&esa ba#! b"(s reso"rces :r&mar&*( 5&'6 f"#$s ob'a&#e$ from &'s *&ab&*&'&es as ca# be see# from '6e fo**o5&#g c*ass&c acco"#'&#g e"a'&o# eso"rces L&ab&*&'&es Q a#! Ca:&'a* O5#ers> Ca:&'a* f"#$sPro'ab&*&'( &s s&m:*( '6e ca:ac&'( 'o ma!e a :ro', a#$ a :ro' &s 56a' &s *ef' oer from &#come ear#e$ af'er (o" 6ae $e$"c'e$ a** cos's a#$ e?:e#ses re*a'e$ 'o ear#&#g '6e &#come; I' &s s&m:*( '6e ab&*&'( of '6e com:a#( 'o '"r# b"s&#ess ac'&&'( &#'o :ro's; Page &) of '(
Pro'ab&*&'( ra'&os are more *o#gB'erm '6a# *&"&$&'( ra'&o; T6e maor ra'&os &# '6&s c*ass are e'"r# o# eso"rces, e'"r# o# Ca:&'a* f"#$s, Cos'B'oBI#come a'&o, Ne' &#'eres' &#come 'o 'o'a* o:era'&#g &#come ra'&o a#$ #e' &#'eres' marg&#, com:"'e$ as fo**o5s O:era'&#g &#come $&&$e b( Aerage 'o'a* reso"rces, Ne' &#come $&&$e b( Aerage Ca:&'a* f"#$s, No#B&#'eres' e?:e#ses $&&$e b( 'o'a* o:era'&#g &#come, Ne' &#'eres' &#come $&&$e b( 'o'a* o:era'&#g &#come, a#$ Ne' &#'eres' &#come 'o Aerage ear#&#g reso"rces, res:ec'&e*(;
e'"r# o# eso"rces e'"r# o# reso"rces of '6e com:a#( for '6e :re&o"s (ear 5ere 1;9/, 6&g6er '6a# '6e &#$"s'r( of 1;.J &' $ecreases 'o 1;44 for '6e c"rre#' (ear, 6o5eer, &' &s s'&** aboe &#$"s'r( of 1;3; T6e com:a#( &s aboe aerage for bo'6 (ears; I' :ro&$es e&$e#ce '6a' '6e $ecrease &# a*"e of bo'6 com:"'e$ a#$ &#$"s'r(- from :re&o"s 'o c"rre#' 5ere commo# o# '6e 56o*e ba#!&#g sec'or; T6e com:a#( &s e
e'"r# o# Ca:&'a* f"#$s e'"r# o# ca:&'a* f"#$s of '6e com:a#( for '6e :re&o"s (ear 5ere 19;1, 6&g6er '6a# '6e &#$"s'r( of 13;3J &' $ecreases 'o 13;9 for '6e c"rre#' (ear, 6o5eer, &' &s s'&** aboe &#$"s'r( of 10;9; T6e com:a#( &s aboe aerage for bo'6 (ears; I' :ro&$es e&$e#ce '6a' '6e $ecrease &# a*"e of bo'6 com:"'e$ a#$ &#$"s'r(- from :re&o"s 'o c"rre#' 5ere commo# o# '6e 56o*e ba#!&#g sec'or; I' mea#s '6e com:a#(s :ro'ab&*&'(, meas"re$ b( 6o5 m"c6 :ro' a com:a#( ge#era'es 5&'6 '6e mo#e( s6are6o*$ers &#es'e$, 56ere 6&g6er com:are$ 'o o'6ers &# '6e Page &' of '(
&#$"s'r(; I' &s some'&mes ca**e$ re'"r# o# #e' 5or'6, &# '6e se#se '6a' ca:&'a* f"#$s are #e' 5or'6 of '6e com:a#( af'er $e$"c'&#g *&ab&*&'&es from reso"rces, from '6e o5#ers of '6e com:a#(, 6o:&#g 'o ear# re'"r#s &# '6e f"'"re; T6e 6&g6er '6e OE #"mber, '6e be''er, beca"se '6e com:a#( &s ear#&#g more mo#e( o# *ess o5#er &#es'me#'; 8or 6&g6 gro5'6 com:a#&es 5e s6o"*$ e?:ec' 6&g6er OE, s&#ce '6e com:a#( gro5s ra:&$*(, '6e# OE &s e?ac'*( 6&g6; Aerag&#g OE for '6e :as' e 'o 'e# (ears g&es a be''er &$ea of '6e 6&s'or&ca* gro5'6;
Cos'B'oB&#come ra'&o Cos'B'oB&#come ra'&o of '6e com:a#( for '6e :re&o"s (ear 5ere 0;9., *o5er '6a# '6e &#$"s'r( of .0;.J &' &#creases 'o 1;9 for '6e c"rre#' (ear, 6o5eer, &' &s s'&** be*o5 &#$"s'r( of .2;3; T6e com:a#( &s be*o5 aerage for bo'6 (ears; I' :ro&$es e&$e#ce '6a' '6e &#crease &# a*"e of bo'6 com:"'e$ a#$ &#$"s'r(- from :re&o"s 'o c"rre#' 5ere commo# o#*( 'o 6&g6er '6a# aerage #o' &#c*"$&#g PI- com:a#&es of '6e 56o*e ba#!&#g sec'or; T6&s &s a goo$ res"*', 5&'6 PI segrega'e$ amo#g o'6er ba#!s, s&#ce &' g&es &#es'ors a c*ear &e5 of 6o5 e
Ne' &#'eres' &#come
&#come
'o
'o'a*
o:era'&#g
Ne' &#'eres' &#come 'o 'o'a* o:era'&#g &#come of '6e com:a#( for '6e :re&o"s (ear 5ere 42;24, 6&g6er '6a# '6e &#$"s'r( of 39;/J &' $ecreases 'o 3/;.0 for '6e c"rre#' (ear, 6o5eer, &' &s s'&** aboe &#$"s'r( of 31;2; T6e com:a#( &s aboe aerage for bo'6 (ears; I' :ro&$es e&$e#ce '6a' '6e $ecrease &# a*"e of bo'6 com:"'e$ a#$ &#$"s'r(- from :re&o"s 'o c"rre#' 5ere commo# o# '6e 56o*e ba#!&#g sec'or; I' mea#s '6a' '6e com:a#( &s ear#&#g more #e' &#'eres' &#come o"' of '6e 'o'a* o:era'&#g &#come com:are$ 'o o'6er ba#!s, o'6er '6a# #o#B&#'eres' or o'6er &#come; T6&s &s a goo$ res"*' s&#ce mos' of '6e o:era'&#g &#come s6o"*$ come from '6e #e' &#'eres' &#come, as maor so"rce of Page &* of '(
#a#c&a* :erforma#ce of a ba#!B'(:e of com:a#(; A#$ as reHec'e$ b( '6e er'&ca* a#$ 6or&+o#'a* a#a*(s&s of #e' &#'eres' &#come, &' ga&#e$ s6are &# '6e :&e, from #o#B&#'eres' or o'6er &#come for '6e c"rre#' (ear;
Ne' &#'eres' marg&# Ne' &#'eres' marg&# of '6e com:a#( for '6e :re&o"s (ear 5ere 3;32, 6&g6er '6a# '6e &#$"s'r( of 3;30J &' $ecreases 'o 3;03 for '6e c"rre#' (ear, 6o5eer, &' &s be*o5 &#$"s'r( of 3;30; T6e com:a#( &s aboe aerage for '6e :re&o"s (ear o#*(; I' mea#s '6a' '6e com:a#(s &#es'me#' $ec&s&o#s are be''er com:are$ 'o &'s $eb' s&'"a'&o#s com:are$ 'o o'6ers &# '6e &#$"s'r(; S&#ce '6e &#$"s'r( rema&#s s'ab*e, a $ecrease &# com:"'e$ a*"e $e#o'es a com:*e'e #ega'&e o"'*oo!; A #ega'&e a*"e of '6e ra'&o $e#o'es '6a' '6e rm $&$ #o' ma!e a# o:'&ma* $ec&s&o#, beca"se &#'eres' e?:e#ses 5ere grea'er '6a# '6e amo"#' of re'"r#s ge#era'e$ b( &#es'me#'s; I#es'me#' 6ere ma( :er'a&# 'o *oa#s a#$ a$a#ces, s&#ce '6ese crea'e &#come from &#'eres'; %o5eer, '6e com:a#( 6as :os&'&e amo"#', &' mea#s '6a' '6e com:a#( &s be''er o= &f &' 6a$ "se$ &'s &#es'me#' f"#$s 'o ma!e &#es'me#' '6a# 'o :a( o= $eb's; I' a*so mea#s '6a' &' 6as more mo#e( ear#e$ from &#es'me#' '6a# '6ose $"e 'o &#'eres' e?:e#se; I# '6e :ers:ec'&e of a# &#es'or, 6&g6er #e' &#'eres' marg&# &s a goo$ &#$&ca'or '6a' &#es'me#'s &# '6e com:a#( 5&** s"re*( g&e &# '6e f"'"re 6&g6er re'"r#s '6a# #o', as '6&s ra'&o a*so meas"res re'"r# :ro$"ce$ b( ear#&#g reso"rces, o=se' b( cos' a''r&b"'ab*e 'o ma&#'a&#&#g ear#&#g reso"rces from sacr&c&#g :a(me#' of $eb'sJ 6&g6 :os&'&e &#crease &# a*"e $e#o'es '6a' ear#&#gs reso"rces are co#'&#"o"s*( ear#&#g 6&g6er a#$ 6&g6er; Nega'&e a*"e $e#o'es '6e o::os&'e;
Leerage a'&os Com:a#&es re*( o# a m&?'"re of o5#ers> ca:&'a* f"#$s a#$ $eb' 'o #a#ce '6e&r o:era'&o#s; A *eerage ra'&o &s a#( o#e of seera* #a#c&a* meas"reme#'s '6a' *oo! a' 6o5 m"c6 reso"rce comes &# '6e form of $eb', or assesses '6e ab&*&'( of a com:a#( 'o mee' #a#c&a* ob*&ga'&o#s; #co#'ro**e$ $eb' *ee*s ca# *ea$ 'o cre$&' $o5#gra$es or 5orse; Page &+ of '(
O# '6e o'6er 6a#$, 'oo fe5 $eb's ca# a*so ra&se "es'&o#s; If a com:a#(>s o:era'&o#s ca# ge#era'e a 6&g6er ra'e of re'"r# '6a# '6e &#'eres' ra'e o# &'s *oa#s, '6e# '6e $eb' &s 6e*:&#g 'o f"e* gro5'6 &# :ro's; %&g6er #e' &#'eres' marg&# &s goo$ reHec'&o# of 6a&#g 6&g6er *&ab&*&'&es; A re*"c'a#ce or &#ab&*&'( 'o borro5 ma( be a s&g# '6a' o:era'&#g marg&#s are s&m:*( 'oo '&g6'; T6ere are seera* $&=ere#' s:ec&c ra'&os '6a' ma( be ca'egor&+e$ as a *eerage ra'&o, b"' '6e ma&# fac'ors co#s&$ere$ are &#c*"$e $eb', ca:&'a* f"#$s, reso"rces a#$ &#'eres' e?:e#ses, a#$ '6e( are '6e fo**o5&#g Deb' ra'&o, Deb'B'oBca:&'a* f"#$s ra'&o, a#$ Ca:&'a* f"#$s ra'&o, com:"'e$ as To'a* *&ab&*&'&es $&&$e b( 'o'a* reso"rces, 'o'a* *&ab&*&'&es $&&$e b( 'o'a* ca:&'a* f"#$s, a#$ 'o'a* ca:&'a* f"#$s $&&$e b( 'o'a* reso"rces, res:ec'&e*(;
Deb' ra'&o Deb' ra'&o of '6e com:a#( for '6e :re&o"s (ear 5as 71;47, 6&g6er '6a# '6e &#$"s'r( of 99;/0J &' $ecreases 'o 97;99 for '6e c"rre#' (ear, 6o5eer, &s s'&** aboe &#$"s'r( of 9/;//; T6e com:a#( &s aboe aerage for bo'6 (ears; I' :ro&$es e&$e#ce '6a' '6e $ecrease &# a*"e of bo'6 com:"'e$ a#$ &#$"s'r(- from :re&o"s 'o c"rre#' 5ere commo# o# '6e 56o*e ba#!&#g sec'or; Deb' ra'&o &s #a#c&a* ra'&o '6a' meas"res '6e e?'e#' of a com:a#(s *eerage, or '6e $eb' aggress&e#ess; T6e $eb' ra'&o &s $e#e$ as '6e ra'&o of 'o'a* R *o#gB'erm a#$ s6or'B'erm R $eb' 'o 'o'a* reso"rces, e?:resse$ as a $ec&ma* or :erce#'age; I' ca# be &#'er:re'e$ as '6e :ro:or'&o# of a com:a#(s reso"rces '6a' are #a#ce$ b( $eb'; T6e 6&g6er '6&s ra'&o, '6e more *eerage$ '6e com:a#( &s, &m:*(&#g grea'er #a#c&a* r&s!; T6e com:a#(, from '6e res"*'s, com:are$ 'o o'6er ba#!s, 6ae 6&g6er #a#c&a* r&s!; A' '6e same '&me, *eerage &s a# &m:or'a#' 'oo* '6a' com:a#&es "se 'o gro5, a#$ ma#( b"s&#esses #$ s"s'a&#ab*e "ses for $eb'; Deb' ra'&os ar( 5&$e*( across &#$"s'r&es, 5&'6 *&ab&*&'(B&#'e#s&e b"s&#esses s"c6 as ba#!s 6a&#g m"c6 6&g6er $eb' ra'&os '6a# o'6er &#$"s'r&es *&!e ma#"fac'"r&#g a#$ merc6a#$&s&#g; se$ &# co#"#c'&o# 5&'6 o'6er meas"res of #a#c&a* 6ea*'6, '6e $eb' ra'&o ca# 6e*: &#es'ors $e'erm&#e a com:a#(>s r&s! *ee*; Some so"rces $e#e '6e $eb' ra'&o as 'o'a* *&ab&*&'&es $&&$e$ b( 'o'a* reso"rces; T6&s reHec's a cer'a&# amb&g"&'( be'5ee# '6e 'erms $eb' a#$ *&ab&*&'&es '6a' $e:e#$s o# '6e c&rc"ms'a#ce; I# '6e Page &, of '(
case of '6e $eb' ra'&o, #a#c&a* $a'a :ro&$ers ca*c"*a'e &' "s&#g o#*( *o#gB'erm a#$ s6or'B'erm $eb' &#c*"$&#g c"rre#' :or'&o#s of *o#gB'erm $eb'-, e?c*"$&#g *&ab&*&'&es s"c6 as acco"#'s :a(ab*e;
Deb' 'o ca:&'a* f"#$s ra'&o Deb' 'o ca:&'a* f"#$s ra'&o of '6e com:a#( for '6e :re&o"s (ear 5ere 1027;/., 6&g6er '6a# '6e &#$"s'r( of /94;9J &' $ecreases 'o 999;.7 for '6e c"rre#' (ear, 6o5eer, &' &s s'&** aboe &#$"s'r( of /1/;43; T6e com:a#( &s aboe aerage for bo'6 (ears; I' :ro&$es e&$e#ce '6a' '6e $ecrease &# a*"e of bo'6 com:"'e$ a#$ &#$"s'r(- from :re&o"s 'o c"rre#' 5ere commo# o# '6e 56o*e ba#!&#g sec'or; T6e DC ra'&o &#$&ca'es 6o5 m"c6 $eb' a com:a#( &s "s&#g 'o #a#ce &'s reso"rces re*a'&e 'o '6e amo"#' of a*"e re:rese#'e$ &# s6are6o*$ers ca:&'a* f"#$s; T6e res"*' ma( of'e# be e?:resse$ as a #"mber or as a :erce#'age; T6&s form of DC ma( of'e# be referre$ 'o as r&s! or gear&#g, '6e same as *eerag&#g; %ere, ca:&'a* f"#$sU refers #o' 'o '6e a*"e of s'a!e6o*$ers s6ares b"' ra'6er 'o '6e $&=ere#ce be'5ee# '6e 'o'a* a*"e of a cor:ora'&o# or &#$&&$"a*s reso"rces a#$ '6a' cor:ora'&o# or &#$&&$"a*s *&ab&*&'&es; T6e form"*a for '6&s form of '6e DC ra'&o, '6e#, ca# be re:rese#'e$ as DC To'a* L&ab&*&'&es To'a* eso"rces B To'a* L&ab&*&'&es-; As $&sc"sse$ &# $eb' ra'&o, '6&s ra'&o &s "se$ 'o ga"ge '6e e?'e#' 'o 56&c6 a com:a#( &s 'a!&#g o# $eb's as a mea#s of *eerag&#g; A 6&g6 $eb'ca:&'a* f"#$s ra'&o ge#era**( mea#s '6a' a com:a#( 6as bee# aggress&e &# #a#c&#g &'s gro5'6 5&'6 $eb' a#$ &s of'e# assoc&a'e$ 5&'6 6&g6 *ee*s of r&s!; 8rom '6e res"*'s, '6e com:a#( &s :ro#e 'o 6&g6er *ee* of r&s! com:are$ 'o o'6ers &# '6e &#$"s'r(; I' 5&** res"*' 'o o*a'&*e ear#&#gs; T6e a*"e 5&** #o' g&e a $&rec' ge#era*&+a'&o#, "#*ess '6ese 5ere 'a!e# &#'o co#s&$era'&o#, #o' &s"a**( e&$e#' as 'o '6e c"rre#' mome#'; %ere &' &s, &f '6&s 5ere 'o &#crease ear#&#gs b( a grea'er amo"#' '6a# '6e $eb' cos' &#'eres'-, '6e# '6e s6are6o*$ers be#e' as more ear#&#gs are be&#g s:rea$ amo#g '6e same amo"#' of s6are6o*$ers; %o5eer, &f '6e cos' of '6&s $eb' #a#c&#g e#$s ": o"'5e&g6&#g '6e re'"r#s '6a' '6e com:a#( ge#era'es o# '6e $eb' '6ro"g6 &#es'me#' a#$ b"s&#ess ac'&&'&es, s'a!e6o*$ers s6are a*"es ma( 'a!e a 6&'; If '6e cos' of $eb' becomes 'oo m"c6 for '6e com:a#( 'o 6a#$*e, &' ca# ee# *ea$ 'o ba#!r":'c(, 56&c6 5o"*$ *eae s6are6o*$ers 5&'6 #o'6&#g; Page & of '(
Ca:&'a* f"#$s ra'&o Ca:&'a* f"#$s ra'&o of '6e com:a#( for '6e :re&o"s (ear 5ere 9;9, *o5er '6a# '6e &#$"s'r( of 11;30J &' &#creases 'o 10;11 for '6e c"rre#' (ear, 6o5eer, &' &s s'&** be*o5 &#$"s'r( of 12;33; T6e com:a#( &s be*o5 aerage for bo'6 (ears; I' :ro&$es e&$e#ce '6a' '6e &#crease &# a*"e of bo'6 com:"'e$ a#$ &#$"s'r(- from :re&o"s 'o c"rre#' 5ere commo# o# '6e 56o*e ba#!&#g sec'or; T6&s ra'&o &s "se$ 'o 6e*: $e'erm&#e 6o5 m"c6 s6are6o*$ers 5o"*$ rece&e &# '6e ee#' of a com:a#(B5&$e *&"&$a'&o#; T6&s 5o"*$ mea# '6a', &# '6e ee#' of *&"&$a'&o#, '6e 6&g6er '6e ra'&o, '6e more s6are6o*$ers ma( rece&e B a#$ of co"rse, '6e reerse 6o*$s 'r"e; 8rom '6e res"*'s, '6e com:a#( 6as *o5er ca:&'a* f"#$s com:are$ 'o o'6er &# '6e &#$"s'r(J &# '&mes of *&"&$a'&o# eac6 6o*$er ma( rece&e 6&g6 amo"#' of *&"&$a'&o# a::or'&o#, for :re&o"s a#$ c"rre#' (ears, com:are$ 'o o'6er &# '6e &#$"s'r(; T6e ra'&o &s '6e same as ca:&'a* a$e"ac( ra'&o; T6e sma** :erce#'age of ca:&'a* f"#$s as 'o 'o'a* reso"rces 5as $"e 'o 6&g6 $eb'ca:&'a* f"#$s ra'&o, 'o'a* reso"rces are e"a* 'o 'o'a* $eb's a#$ ca:&'a* f"#$s comb&#e$; I' res"*'e$ 'o com:a#( be&#g o# aggress&e ra'6er '6a# com:*a&sa#' *eerag&#g;
L&"&$&'( a'&os L&"&$&'( ra'&o &s a c*ass of #a#c&a* me'r&cs '6a' &s "se$ 'o $e'erm&#e a com:a#(>s ab&*&'( 'o :a( o= &'s s6or'B'erms $eb's ob*&ga'&o#s; T6&s c*ass of ra'&o &s more foc"s o# s6or'B'erm, ra'6er '6a# *o#gB'erm 56&c6 &s '6e foc"s of :ro'ab&*&'( ra'&os; I# ge#era*, '6e grea'er '6e coerage of *&"&$ reso"rces 'o s6or'B'erm *&ab&*&'&es '6e be''er as &' &s a c*ear s&g#a* '6a' a com:a#( ca# :a( &'s $eb's '6a' are com&#g $"e &# '6e #ear f"'"re a#$ s'&** f"#$ &'s o#Bgo&#g o:era'&o#s; O# '6e o'6er 6a#$, a com:a#( 5&'6 a *o5 coerage ra'e s6o"*$ ra&se a re$ Hag for &#es'ors as &' ma( be a s&g# '6a' '6e com:a#( 5&** 6ae $&' as eas&*( co#er'e$ 'o cas6; T6e maor ra'&os for a ba#! Page & of '(
'(:e of com:a#( &s as fo**o5s, arra#ge$ &#'o $ecreas&#g *&"&$&'( of #"mera'or reso"rces Cas6 a#$ D"e 'o o'6er ba#!s 'o De:os&'s, L&"&$ eso"rces 'o De:os&'s, a#$ Loa#s, gross 'o $e:os&'s, com:"'e$ as Cas6 a#$ $"e 'o o'6er ba#!s $&&$e $e:os&'s *&ab&*&'&es, L&"&$ reso"rces $&&$e b( $e:os&' *&ab&*&'&es, a#$ Loa#, gross $&&$e b( $e:os&' *&ab&*&'&es, res:ec'&e*(; T6e com:a#( are sa&$ 'o be more *&"&$ 'o #a#ce c"rre#' ma'"r&#g ob*&ga'&o#s, *&!e $e:os&' *&ab&*&'&es, &f '6e ra#!&#g of '6e '6ree ra'&os are $ecreas&#g from Cas6 a#$ D"e from o'6er ba#!s 'o $e:os&'s ra'&o, L&"&$ Asse's 'o $e:os&'s ra'&o, a#$ Loa#, gross 'o $e:os&'s ra'&o, '6e same as '6e&r *&"&$&'(, mos', *&"&$, *ess *&"&$, res:ec'&e*(; De:os&'s are "se$ as maor bas&s s&#ce '6&s acco"#' co#s'&'"'e '6e b"*! of *&ab&*&'&es of a ba#! '(:e of com:a#(;
Cas6 a#$ D"e from o'6er ba#!s 'o $e:os&'s ra'&o Cas6 a#$ D"e from o'6er ba#!s 'o $e:os&'s of '6e com:a#( for '6e :re&o"s (ear 5ere 27;0., *o5er '6a# '6e &#$"s'r( of 33;J &' $ecreases 'o 23;19 for '6e c"rre#' (ear, 6o5eer, &' &s s'&** be*o5 &#$"s'r( of 27; T6e com:a#( &s be*o5 aerage for bo'6 (ears; I' :ro&$es e&$e#ce '6a' '6e $ecrease &# a*"e of bo'6 com:"'e$ a#$ &#$"s'r(- from :re&o"s 'o c"rre#' 5ere commo# o# '6e 56o*e ba#!&#g sec'or; 8rom '6e res"*'s, &' ca# be &#ferre$ '6a' '6e com:a#( 6as *ess mos' *&"&$ asse's 'o be "se$ 'o #a#ce $e:os&' re"&reme#' com:are$ 'o o'6ers o# '6e &#$"s'r(; T6erefore, '6e( 6ae sma**er *&"&$&'( as com:are$ 'o o'6ers o# '6e &#$"s'r(; Cas6 a#$ $"e from o'6er ba#!s are '6e '5o mos' *&"&$ asse's of a ba#! '(:e of com:a#(;
L&"&$ Asse's 'o $e:os&'s ra'&o Ca:&'a* f"#$s ra'&o of '6e com:a#( for '6e :re&o"s (ear 5ere 1;4, *o5er '6a# '6e &#$"s'r( of ;.J &' $ecreases 'o 0;24 for '6e c"rre#' (ear, 6o5eer, &' &s s'&** be*o5 &#$"s'r( of 7;; T6e com:a#( &s be*o5 aerage for bo'6 (ears; I' :ro&$es e&$e#ce '6a' '6e $ecrease &# a*"e of bo'6 com:"'e$ a#$ &#$"s'r(- from :re&o"s 'o c"rre#' 5ere commo# o# '6e 56o*e Page )( of '(
ba#!&#g sec'or; 8rom '6e res"*'s, &' ca# be &#ferre$ '6a' '6e com:a#( 6as *ess *&"&$ asse's 'o be "se$ 'o #a#ce $e:os&' re"&reme#' com:are$ 'o o'6ers o# '6e &#$"s'r(; T6erefore, '6e( a*so 6ae sma**er *&"&$&'( as com:are$ 'o o'6ers o# '6e &#$"s'r(; L&"&$ asse's are com:ose$ of cas6 a#$ $"e from ba#!s a#$ #a#c&a* sec"r&'&es, e?c*"$&#g '6ose ca:&'a* f"#$s sec"r&'&es; T6&s &s a broa$er a#$ fa&rer 5a( of meas"r&#g *&"&$&'( of a com:a#(; A#$ s&#ce &' &#o*es more acco"#'s, &'s :erce#'age 5as ass"me$ 6&g6er '6a# '6e rs' *&"&$&'( ra'&o; If '6e res"*'&#g :erce#'age &s 6&g6er '6a# '6e rs' ra'&o, b( o#*( a# &#s&g#&ca#' amo"#', '6e# '6e res' of '6e *&"&$ asse's #a#c&a* asse's- ca##o' be "se$ as r&s! acco"#' 56e# "#foresee# $e:os&' re"&reme#'s e?&s' a#('&me, beca"se of '6e&r sma** o*"me; 6e# '6&s 6a::e#s, '6e rs' '5o ra'&os 5&** be ra#!e$ as o#e a#$ '6e same;
Loa#, gross 'o $e:os&'s ra'&o Loa#, gross 'o $e:os&'s of '6e com:a#( for '6e :re&o"s (ear 5ere .;11, 6&g6er '6a# '6e &#$"s'r( of .4;3J &' &#creases 'o .7;1 for '6e c"rre#' (ear, 6o5eer, &' &s s'&** aboe &#$"s'r( of .9; T6e com:a#( &s aboe aerage for bo'6 (ears; I' :ro&$es e&$e#ce '6a' '6e &#crease &# a*"e of bo'6 com:"'e$ a#$ &#$"s'r(- from :re&o"s 'o c"rre#' 5ere commo# o# '6e 56o*e ba#!&#g sec'or; T6&s ra'&o &s a commo#*( "se$ s'a'&s'&c for assess&#g a ba#!>s *&"&$&'( b( $&&$&#g '6e ba#!s 'o'a* *oa#s b( &'s 'o'a* $e:os&'s; T6&s #"mber, a*so !#o5# as '6e LTD ra'&o, &s e?:resse$ as a :erce#'age; If '6e ra'&o &s 'oo 6&g6, &' mea#s '6a' ba#!s m&g6' #o' 6ae e#o"g6 *&"&$&'( 'o coer a#( "#foresee# $e:os&' re"&reme#'sJ &f '6e ra'&o &s 'oo *o5, ba#!s ma( #o' be ear#&#g as m"c6 as '6e( co"*$ be; 8rom '6e res"*'s, '6e com:a#( 6ae m"c6 e#o"g6 of &' be&#g *ess *&"&$ 'o coer a#( "#foresee# $e:os&' re"&reme#'s 'o #a#ce cos' of ma&#'a&#&#g $e:os&'s; A $ec&' of #a#c&#g for $e:os&' *&ab&*&'&es 5&** &#crease '6e *&!e*&#ess of &#es'&#g &# *oa#s; So '6e 6&g6er '6e ra'e of *oa#s, gross com:are$ 'o $e:os&'s, mea#s '6a' 'o com:e#sa'e cos' of ma&#'a&#&#g *&ab&*&'&es from $e:os&'s of $e:os&'ors, as cre$&'ors, '6e com:a#( &#es' or '6e( m&g6' &#es' more o# *oa#s a#$ a$a#ces 'o ob'a&# re'"r#s as *a''er com:e#sa'&o#; T6&s &s some6o5 #o' goo$ s&#ce *oa#s a#$ a$a#ces com:are$ 'o o'6er reso"rces are *ess *&"&$J
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res"*'s, '6e com:a#( &s 5&**&#g 'o $&s'r&b"'e &#come 5&'6 6&g6er :erce#'age of &'s s6ares :r&ce com:are$ 'o o'6ers &# '6e &#$"s'r(; T6e &#crease reHec's '6a' '6e com:a#( becomes more co#$e#' '6a' '6e $&&$e#$ g&e# 5&** be fr"&'f"* 'o '6e f"'"re of '6e com:a#(, a#$ &' &s "s' 'o g&e '6e :erce#'age of s6are :r&ce 'o &'s *o(a* s6are6o*$ers; I' reHec's '6e com:a#&es foreseeab*e goo$ f"'"re ear#&#gs; %&g6 $&&$e#$ ra'&o &s 6&g6 foreseeab*e f"'"re &#come :roec'&o#; I#es'ors 56o re"&re a m&#&m"m s'ream of cas6 Ho5 from '6e&r &#es'me#' :or'fo*&o ca# sec"re '6&s cas6 Ho5 b( &#es'&#g &# s'oc!s :a(&#g re*a'&e*( 6&g6, s'ab*e $&&$e#$ (&e*$s; Ye', 6&g6 $&&$e#$s ma( of'e# come a' '6e cos' of gro5'6 :o'e#'&a*; Eer( $o**ar a com:a#( &s :a(&#g &# $&&$e#$s 'o &'s s6are6o*$ers &s a $o**ar '6a' com:a#( &s #o' re&#es'&#g &# &'se*f &# a# e=or' 'o ma!e ca:&'a* ga&#s; 6&*e be&#g :a&$ for 6o*$&#g a s'oc! &s a''rac'&e 'o ma#(, s6are6o*$ers ca# ear# 6&g6 re'"r#s &f '6e a*"e of '6e&r s'oc! &#creases 56&*e '6e( 6o*$ &'; I# o'6er 5or$s, 56e# com:a#&es :a( 6&g6 $&&$e#$s &' ma( come a' a cos'; More &#es'ors 5&** &#es' s&#ce '6e ra'&o of '6e com:a#( &#creases; T6e a*"e aga&# &s some56a' :ro:or'&o#a'e 'o 56a' a com:a#( e?:ec's 'o :rese#', &' &s some6o5 s"bec'&e, same as for EPS a#$ Deb'B'oBca:&'a* f"#$s ra'&o sce#ar&os; 6e# com:a#&es :a( 6&g6 $&&$e#$s 'o '6e&r s6are6o*$ers, &' ca# &#$&ca'e a ar&e'( of '6&#gs abo"' '6e com:a#(, s"c6 as '6a' '6e com:a#( m&g6' c"rre#'*( be "#$era*"e$ or '6a' &' &s a''em:'&#g 'o a''rac' &#es'ors; O# '6e o'6er 6a#$, &f a com:a#( :a(s *&''*e or #o $&&$e#$s, &' ma( &#$&ca'e '6a' '6e com:a#( &s oera*"e$ or '6a' '6e com:a#( &s a''em:'&#g 'o gro5 &'s ca:&'a*; Cer'a&# com:a#&es &# :ar'&c"*ar &#$"s'r&es, 56e# '6e( are 5e** es'ab*&s6e$ a#$ s'ea$(Bear#&#g, of'e# 6ae goo$ $&&$e#$ (&e*$s ee# '6o"g6 '6e( are #o' "#$era*"e$; a#!s a#$ "'&*&'&es of'e# fa** &#'o '6&s ca'egor(; 6&*e a com:a#( ma( :a( 6&g6 $&&$e#$s 'o &'s s6are6o*$ers for a '&me, '6&s ma( #o' a*5a(s be so; Com:a#&es of'e# 'r&m '6e&r $&&$e#$ :a(me#'s or s'o: '6em a*'oge'6er $"r&#g 6ar$ eco#om&c '&mes or 56e# '6e com:a#( &s e?:er&e#c&#g 6ar$ '&mes of &'s o5#, so o#e ca# rare*( re*( o# co#s&s'e#' $&&$e#$s o# a :erma#e#' bas&s; Ta!e #o'e of '6ese;
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As '6e PI &s 5e**B!#o5# from be&#g a 'o: co#'e#$er &# '6e #a#c&a* &#s'&'"'&o# sec'or of o"r co"#'r(, '6e ba#! s'&** re&g#e$ from '6ese :as' fe5 (ears ": 'o '6e :rese#'; T6e a#a*(s&s ma$e b( '6&s gro": :roes '6e &m:ress&e e
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ecomme#$a'&o# 8rom '6e res"*'s of '6e er'&ca*, 6or&+o#'a* a#a*(s&s, a#$ ra'&o a#a*(s&s, 5e recomme#$ '6e fo**o5&#g :o&#' for '6e PIs ma#ageme#' 1; Ma&#'a&# or &m:roe '6e&r #a#c&a* :erforma#ce s'a'"s as 56a' ca# be see# from '6e&r oera** :ro'ab&*&'( ra'&os, 56&c6 &s aboe aerage; %e#ce, &#crease ser&ces :r&ces; a#!s ca# "se a c"s'omerBce#'r&c :r&c&#g :rograms; T6&s 5&** &#crease EPS, a#$ *a''er &#crease ba#! oera** s'a'"s; 2; I#crease '6e :erce#'age for ca:&'a* f"#$s; 8or ar&o"s reaso#s '6ere &s a s'ro#g &#ce#'&e for ba#!s 'o !ee: '6e ca:&'a* f"#$s as *o5 as :oss&b*e; Ma&#*( beca"se '6e &#'eres' ra'es o# '6e *oa#s are 6&g6er '6a# '6e &#'eres' ra'es o# '6e $e:os&'s, '6e re'"r# o# e"&'( ca# be :"s6e$ 6&g6er b( &#creas&#g '6e *eerage &;e; '6e ra'&o of $e:os&'s 'o ca:&'a* f"#$s-; %o5eer, sma** e"&'( ca:&'a* &#creases '6e r&s! of '6e ba#! go&#g ba#!r":' 56e# '6e a*"e of &'s o"'s'a#$&#g *oa#s fa**s be*o5 '6e a*"e of '6e $e:os&'s; If '6&s 6a::e#s, '6e e"&'( ca:&'a* ca# be "se$ 'o absorb s"c6 *osses; T6e 6&g6er '6e e"&'( ca:&'a* &s, '6e 6&g6er '6e ba#!>s ca:ac&'( 'o absorb *osses; Las'*(, '6&s 5&** &#crease boo! a*"e, a#$ *a''er &#crease ba#! s'a'"s; As SP, a$"s'e$ '6e *ee* of '6e re"&re$ m&#&m"m ca:&'a* 'o e#s"re '6a' ba#!s s'a#$ o# a s'ro#g ca:&'a* base 'o s"::or' a '6res6o*$ sca*e of o:era'&o#s 'o o:era'e &ab*( a#$ ser&ce e=ec'&e*( '6e #ee$s of '6e&r c*&e#'s, &#creas&#g &s '6e bes' :oss&b*e a$&ce for #a#c&a* s'ab&*&'( a#$ e=ec'&e $e*&er( of ser&ces; 3; L&"&$&'( a#$ ca:&'a* re"&reme#'s bo'6 :*a( a# &m:or'a#' ro*e &# '6e &ab&*&'( a#$ so*e#c( of ba#!s; T6erefore, '6e( s6o"*$ &#crease eseres a#$ L&"&$ asse's, bo'6 :o&#' $e'erm&#a#'s of a s'ab*e ca:&'a* a#$ *&"&$&'( s'a'"s for co#'&#ge#c&es, res:ec'&e*(;
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