Northern Rock: a low net interest margin; a low cost-income ratio
- Thread starter ajsa
- Start date
Hi asja,
I don't have any insight beyond the assignment on Northern Rock which goes no further than " That type of analysis might have thrown into relief key aspects of Northern
Rock’s business model. Comparison would have shown Northern Rock, relative to its peers, as having a high public target for asset growth (15-25% year-on-year) and for profit growth; a low net interest margin; a low cost:income ratio; and relatively high reliance on wholesale funding and securitisation."
...however, in a FinServices financial statement, typically interest income - interest expense = net interest margin and this line item is before ("above") the non-interest expenses (e.g., SG&A) so I could imagine this resulting from (i) low margin interest earning product and (ii) as a separate matter, low non-interest expense itesm..but frankly I don't know specifically what the "cost:income" ratio refers to in this context...David
I don't have any insight beyond the assignment on Northern Rock which goes no further than " That type of analysis might have thrown into relief key aspects of Northern
Rock’s business model. Comparison would have shown Northern Rock, relative to its peers, as having a high public target for asset growth (15-25% year-on-year) and for profit growth; a low net interest margin; a low cost:income ratio; and relatively high reliance on wholesale funding and securitisation."
...however, in a FinServices financial statement, typically interest income - interest expense = net interest margin and this line item is before ("above") the non-interest expenses (e.g., SG&A) so I could imagine this resulting from (i) low margin interest earning product and (ii) as a separate matter, low non-interest expense itesm..but frankly I don't know specifically what the "cost:income" ratio refers to in this context...David
Similar threads
