Project

Banking Project

The three liquidity ratios for the financial analysis are liquid assets to deposit-borrowing ratio, Loan to deposit and Net loan to total asset. These three ratios of both banks are discussed and analyzed below.Liquid asset to deposit borrowing ratio measures the availability of the fund with respect to its obligations. In the year 2010, CIMB Berand Islamic Bank- Malaysia had the capability of covering 34 % of short term obligations while Al-Rajhi Bank was capable of covering 33 % of their short term obligations. In the following year, The Malaysian bank liquid asset to deposit-borrowing percentage dropped down to 26 % and that of Al-Rajhi Bank dropped down to 30 %, this indicated that the liquidity of the Malaysian Bank was less in comparison to Al-Rajhi Bank. In the year 2012, Al-Rajhi Bank liquidity further increased making them capable of covering short-term obligations to about 32% while the CIMB Berand Islamic Bank- Malaysia was not able to increase or maintain its liquidity, which resulted in a major decrease in their liquidity. CIMB Berand Islamic Bank- Malaysia in 2012 was only capable of covering 12 % of short-term obligations. 2013 was a completely shocking for Al-Rajhi Bank as they were only capable of covering 10 % of their short term obligations, which shows that their liquidity dropped down by 22 % while CIMB Berand Islamic Bank- Malaysia maintained their ratio at 12 %.CIMB Berand Islamic Bank- Malaysia loan to deposit ratio in 2010 was 61% and that of Saudi Arabia Bank was 78%, which indicated that the Al-Rajhi Bank had low liquidity as compared to the Malaysian Bank. Year 2011 was other way round as the Al-Rajhi Bank had more liquidity as compared to that of the Malaysian Bank. A reverse patter n was again observed in 2012, which means that both banks were not affected by the external factor. In 2013 the liquidity of both banks increased which means that the both banks had more loans and comparatively less

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