Ally Financial Inc. is an independent financial firm that was founded in 1919. They are a leading automotive financial company, provide mortgages and other commercial financing and also became a bank holding company in December 2008. Ally Bank is a subsidiary of Ally Financial and raises deposits from customers through the internet, over the phone and through mobile applications. As a direct bank, Ally does not have any bank branches and strives to grow its business through direct channels (internet, phone, mail, and mobile). The percentage of customers who prefer to do banking via direct channels has increased by 41% between 2007 and 2012, while the number of people who prefer traditional branch banking declined by 21%. In order to analyze Ally, I will be evaluating its balance sheet and performance ratios over the period from June 2006 to June 2013. This will show the progression of the bank throughout the 2008-2009 financial crisis. I will compare Ally’s financial data to the whole US banking industry as a way to analyze the banks risk and performance over that period. Factors such as profitability, credit risk, capital adequacy, liquidity risk, interest rate risk, market risk, ad off balance sheet exposures will all be evaluated. Ally Bank is showing growth over the period from 2006-2013. Total assets have increased by over 2000% from $3.5B to $92B. Total deposits have been increasing steadily at an average of 31% every year since 2006. Within the past year, net loans have been steady at about $66B. Ally’s lines of business include mortgage loans, insurance, and automotive loans. Over the past three years, automotive loans have been increasing while insurance and mortgage loans have been decreasing. I suspect... ... middle of paper ... ...its, and long term assets to total assets. However, in the past two years these metrics seem to be getting worse. Ally’s ROE and ROA is dropping along with its cash to deposit ratio and cash and AFS to deposits. It’s no longer in a better position when compared to other financial institutions. Ally has minor exposure to other risks though. It does not carry many derivatives to assets, all deposits are in US offices, and Ally does not carry any trading account assets. All of these measures keep risks low when compared to other banks. Going forward, Ally will need to watch its gap ratios, particularly the 1-3 year bucket. Ally has a negative gap ratio for this time period meaning that it has liability sensitivity for that time bucket. Works Cited http://www.ally.com/about/investor/annual-reports/ http://www2.fdic.gov/SDI/ http://www2.fdic.gov/Call_TFR_Rpts/
Capital One uses IT through its information-based strategy (IBS) to “record, organize, and analyze data on the characteristics and behaviors of their customers,” as stated by CEO Richard Fairbank. Their philosophy was to exploit information by constructing scientific models that could be used to both assess the creditworthiness of potential cardholders through FICO scoring, and to customize product offerings for existing ones. This was done through data mining, sorting, customizing offers and marketing campaigns, and then analyzing this data to see what campaigns worked – for what reason and what it returned in revenue and profit generation. This differs from other financial institutions in that these other institutions were compiling data manually, accepting applicants based upon debt-income ratios and were all charging the same interest rate and annual fee.
The new era in banking is what Ally Banks has to offer. We may not be able to walk into a brick and mortar building…but you are able to reach someone 24/7 anytime one wants, and have instant online banking availability. Ally Bank boasts that they do not pay rent on building instead they pass that savings along to the customer. Ally Bank, a subsidiary of Ally Financial Inc., originally stemmed from General Motors Acceptance Corporations, otherwise known as GMAC. GMAC was founded in 1919 and was the key provider of automotive financing to its dealerships.
This short report aims to give a brief overview of Deutsche Bank’s alarming situation and describe the sharp decrease of its profitability. It will briefly introduce the context of this crisis and aim to explain it through an analysis of one of the most used indicators of performance for banks, the return on equity (ROE).
The banking industry is under pressure in today’s business climate. Banks have been through big changes. There is opportunity, but there is also increasing competition. To be the preferred bank means changing “good enough” into a unique value proposition. And that means changing the way people have always done things, change on this level requires cutting edge technology. Change cannot be achieved with a simple directive or surface adjustment especially within the banking industry. It requires an innovative rethink of the entire system, in a strong partnership between bank leaders and their change agents. New systems and policies must support the strategy to be successful. The real test of a good strategy implementation plan is whether the people understand the strategy, are motivated and enabled to implement it, and actually start achieving its goals.
Bank of America is an international and widely known banking and financial corporation. Its headquarters are located in Charlotte, North Carolina, and the Bank of America is the second largest bank holding company in the United States of America. A bank holding company is a company that owns and controls one or more banks, but does not necessarily take part in the act of banking itself. This gives it a greater range of flexibility that enables it to raise capital for itself more easier than a traditional bank. Other benefits include: “The holding company can assume debt of shareholders on a tax free basis, borrow money, acquire other banks and non-bank entities more easily, and issue stock with greater regulatory ease.”. In essence, this grants the bank holding company a much more freely moving business that has a distinct advantage over its lesser bank brethren. Bank of America has a variety of interesting topics that will be extensively and thoroughly covered. These include Bank of America’s history, its financial and stock analysis, its multitude of operations, and the large number of controversies that surround the Bank. Once the said topics have been rigorously and exhaustively described, the beautiful conclusion will rear its head and allow the reader to bask in the satisfaction of finishing this extremely interesting paper.
JPMorgan Chase and Company was set up in 1968 as a corporation by Delaware law. It is the leader in financial transaction processing and asset management, financial services for consumers and businesses, and also investment banking. This company is the servant to millions of customers in over 70 countries. The principle bank branches include JPMorgan Chase Bank, National Association and Chase Bank USA, NA. JPMorgan Chase's principal non-bank branch is J.P. Morgan Securities, Inc. The Retail Financial Services division helps consumers and businesses through personal service at bank branches, ATMs, online banking, telephone banking, auto dealerships and school financial aid offices. I never knew that Chase bank was a part of JPMorgan Company until now; I always knew the company as just “JPMorgan”. The Company’s Commercial Banking branch works for over 26,000 clients nationwide. Its Treasury and Securities Services branch is a worldwide leader in transaction, investment and information services. The JPMorgan Chase's business headquarters are located in New York City. Their retail financial services and commercial banking headquarters are located Chicago. J.P. Morgan, Chase Manhattan, Chemical, Manufacturers Hanover, Bank One, First Chicago, and National Bank of Detroit also funded the development of communities worldwide.
By the 1970s the bank had firmly developed a policy of expansion by acquisition or formation of subsidiaries with their own identities and expertise.
Wells Fargo leading aspects has shown they are strong and manageable. One of the factors of management that has caught my attention is how transparent they are. According to John Stumpf, CEO of Wells Fargo, if an employee wants to say it, just say it! Stumpf said that managers have learned to disagree without being disagreeable. The fact that they care for their customers so much, they tend to likewise care for their employees.
In November 2007, the housing market in the United States started to take a downward turn. With loan defaults on the rise, the loans on Citigroup’s books were overdue for a revaluation. Due to the housing market decline and consumer spending cuts, Citigroup announced they expected to post a loss of between 6 and 11 million dollars. Citigroup’s stock plummeted. (Reference)
Ratio analysis are useful tools when judging the performance of a company by weighing and evaluating the operating performance (Block-Hirt). There are 13 significant ratios that can separate by four main categories, profitability, asset utilization, liquidity and debt utilization ratios. The ratio analysis covered here consists of eight various ratios with at least one from each of these main categories. These ratios were used to compare and contrast the performance of Verizon versus AT& T over the years 2005 and 2006.
Banks have been forced to respond to the substantial increase in capital and liquidity requirements by scaling down their businesses and strategically evaluating their choice of customers, products and geographies. To a certain extent simplification of banking business is positive since leading up to the crisis, bank balance sheets were undoubtedly too big, business models were too complex, leverage was too high and risk models were inadequate and to handle the extreme events that occurred. However the required changes will inevitably lead to lower returns.
Barra Airways has an interest coverage ratio (ICR) of 18; this means that Barra Airways is not burdened with a large amount of interest payments on existing debts. Therefore, using debt does appear to be an attractive source of finance. This is because Barra Airways existing interest burden is low, meaning that to increase it would have a reduced effect on the company’s net profit. However, EasyJet has an ICR of 30.88, considerably larger than that of Barra Airways [5]. Lenders may look at this data and conclude that Barra Airways is a riskier company to lend too than others in the same industry; this will result in a higher interest rate on any debt taken out.
According to Alliance bank (n.d.), family was the most valuable assets that continue to drive success of their company. Alliance bank was committed to provide their employees a safe, health, and conductive working environment. Human capital investment was the strategic and integral part in the Bank’s policies, financial commitment, and business framework. Besides that, development is critical to our goal of being the Malaysia’s Best Customer Service Bank.
A variety of groups are concerned in bank profitability for various reasons. The bank shareholders would want to know if the value of their investments is high or low. The investors also use current and past performance to predict future price of the banks’ shares traded on the stock exchanged. The management of the bank as trustee of the shareholders is evaluated and compensated on the basis of how well their decisions and planning have contributed to growth in assets and profits of their banks. Employees of bank also are concerned with profits, since their salaries and promotions are frequently tied to the profitability performance of their banks.
The banking industry plays a vital role in an economic growth and the stability of a country. The industry focuses on the in and out flow of the money. This industry is well known for financial dealings, investing, borrowing, and storing money. The banking industry plays a pivotal role in providing capitals whereby the financial intermediaries would be channeling the fund to companies or institutions that is in dire need of funds to expand their business.