Return-On-Asset Ratio, Effects on the Loan Portfolio and the Investment Portfolio, and the FDIC
It is always vital for management to monitor all of the corporation's finance, including income as well as expenses on a regular and frequent basis to constitute decisions on where to invest the corporation's funds. A low giveback on assets ratio indicates that unsuccessful or insufficient management of interest rate margin, noninterest income and expenses, and loan loss reserves is present. Banks have been focusing to receive a high part of net income from noninterest income by providing other services, such as insurance or brokerage. Fees are another source of noninterest income for banks. When noninterest expenses (such as overhead or advertising expenses) exceed noninterest income however, then the giveback on assets declines.
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