o_19heefouak9i9v4do11ac41pi7a.pdf

DEVELOPMENT BANKING IN GREECE 1963-2002
Figure 6: Net profit margins
Source: Author’s calculations
Table 6: Net profit margin: summary statistics
ETEBA Investment Bank ETBA
1965-74 1975-86 1987-93 1963-74 1976-86 1987-92 1967-74 1975-86 1987-1993
Mean 0.01 0.03 0.02 -0.02 -0.02 -0.05 -0.01 -0.0008 0.01
Median 0.01 0.02 0.02 0.01 -0.01 -0.03 -0.01 -0.005 0.01
Std. Dev. 0.005 0.02 0.01 0.10 0.008 0.03 0.006 0.02 0.12
Min. 0.00 0.00 0.00 -0.34 -0.03 -0.09 -0.02 -0.02 -0.11
Max. 0.01 0.07 0.04 0.02 -0.01 -0.02 0.00 0.04 0.25
Solvency ratios
Another interesting ratio is the loss ratio (LR) (Ledgerwood, 1999:211) 9 which is
calculated by dividing the amount of accumulated provision for losses over total
earning assets. In this case, we have included in the earning assets not only the
extended loans but also total investment in securities. This ratio reflects the proportion
of losses that the bank expects –as an actual or precautionary measure–
that they might need to write off as a proportion of all earning assets. In this
sense, it gives us an indication of the riskiness of the portfolio of the bank as perceived
by its management.
9 Ledgerwood (1999:211) calculates this ratio as: loan loss reserve ratio (LLRR) loan
loss reserves for the period over portfolio outstanding for the period. Murinde & Kariisa-
Kasa (1997) calculate a similar measure: COTL net charge-offs over total loans and leases.
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