Asset Quality Ratios Analysis: Raiffeisen Bank Albania

Asset Quality Ratios Analysis
Bank managers try to qualify their loans in order to provide more profit since Loans are assets in Bank. They try to avoid NPL (Non Performing Loan) because more NPL a bank has more costs it is for the Bank. How a non performing loan is a cost for the bank?
If a Loan is given and it is not returned back by the individual or the business than this loan is called non performing loan and in order the bank to cover this “bad” loan, they should provide more capital to the BOA (Bank of Albania). This capital is cost to the bank because they can’t invest it.
Coming to Non Performing Loan Of Raiffeisen Bank for 2012 according to Annual Report for 2012, the category of nonperforming loan is defined as “Write Off”.
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It shows us the ability of the board and management to plan and to respond to different kind of risks, compliance with laws and regulations, effectiveness of management in information and risk monitoring, management to success of the bank, and overall performance of the bank and its risk profile. Raiffeisen Bank Albania is continuing to grow in this market, it is improving year by year with a great success in Albania. Let’s see some indicators that shows how RBAL has been doing for 2011 and 2012 in Management
Giving us a Total Asset Growth Rate for this two years by -1.22%. This means that in 2012 RBAL has taken less risk by decreasing Total Asset and in the other hand we see that they have increased the Loan Growth Rate from 2011 that was 134 Million to 135 Million in 2012. Increasing its Loan Growth Rate by 0.74% . Another indicator that shows us how good is management of RBAL is Earning Growth Rate that is increase with 5.8 % from 2011 to 2012. This was a huge success of RBAL increasing its earning Growth Rate from 13 Million to 13.8 Million for 1 year, despite their bad assets they had this huge earning growth.
Table. . RBAL Management Quality Ratios
Management 2011-2012
Total Asset Growth Rate -1.22%
Loan Growth Rate 0.74%
Earning Growth Rate 5.8%

As we can see in the table of Management Quality Ratios the only negative Ratio is Total Asset Growth Rate with -1.22% but it is explained as the managers have decided not to risk much in 2012 as in 2011. A great management performance is done by RBAL for Loan Growth Rate and Earning Growth Rate respectively 0.74% and 5.8%. Therefore for Management Quality of Raiffeisen Bank Albania it can be given a rating ______________________.

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