Professional Documents
Culture Documents
13WBD02114
13WBD00976
13WBD03066
TUTORIAL GROUP
: DBF G9
NAME OF TUTOR
DAY
: TUESDAY
DATE OF SUBMISSION
: 21.07.2014
TABLE OF CONTENT
NO.
1.
2.
3.
4.
5.
6.
TITLE
Cover
Table of content
Assessment Criteria For Coursework
Group Member Appraisal Form
Plagiarism Statement
1. Discuss whether banks generated more non-interest based income than
interest based income from the bank activities from 2000 to 2015.
PAGE
1
2
3
4-6
7
8-17
7.
18
8.
19-20
9.
21-22
10.
11.
Appendix
Reference
23-24
25
Names of Students:
1. CHONG SHIUO MUN
2. CHONG KAH YAN
3. CHOU KAH MEI
Criteria
Maximum
Marks
20
20
20
20
Marks
Allocated
Remarks
The basis of this evaluation is your group members commitment to completing the assignment
and to their regard for other members of the group. It should be based on the contribution given
by each member and his or her involvement in this assignment.
Group members should be appraised using the following basis:
100%
50%
0%
Group member attended all group meetings or if unable to attend, contacted the
group in advance and came to an alternative arrangement that the majority of group
members were happy with.
50%
50%
50%
50%
50%
0%
0%
0%
0%
0%
Note:
Failure to submit a Group member appraisal Form will result in a zero appraisal being recorded
against your name.
The basis of this evaluation is your group members commitment to completing the assignment
and to their regard for other members of the group. It should be based on the contribution given
by each member and his or her involvement in this assignment.
Group members should be appraised using the following basis:
100%
50%
0%
Group member attended all group meetings or if unable to attend, contacted the
group in advance and came to an alternative arrangement that the majority of group
members were happy with.
50%
50%
50%
50%
50%
0%
0%
0%
0%
0%
Note:
Failure to submit a Group member appraisal Form will result in a zero appraisal being recorded
against your name.
The basis of this evaluation is your group members commitment to completing the assignment
and to their regard for other members of the group. It should be based on the contribution given
by each member and his or her involvement in this assignment.
Group members should be appraised using the following basis:
100%
50%
0%
Group member attended all group meetings or if unable to attend, contacted the
group in advance and came to an alternative arrangement that the majority of group
members were happy with.
50%
50%
50%
50%
50%
0%
0%
0%
0%
0%
Note:
Failure to submit a Group member appraisal Form will result in a zero appraisal being recorded
against your name.
Registration. No.
Signature
13WBD02114
...
13WBD00976
...
...
Programme
Tutorial Group
Group 9
Date
21 July 2014
Discuss whether banks generated more non-interest based income than interest
based income from the bank activities from 2000 to 2015.
Standard Chartered (Malaysia)
RM ('000)
YEAR
INTEREST BASED INCOME
NON-INTEREST BASED INCOME
2000
914,731
205735
2001
1078,532
557994
2002
1141,043
252397
2003
1,201,133
789032
2004
1,309,683
536876
2005
2,080,936
1174427
2006
2,411,860
450059
2007
2,882,081
439100
2008
3,064,785
501067
2009
2,937,002
511537
2010
2,592,586
506979
2011
2,952,529
689468
2012
5,493,832
882199
2013
5,609,243
1222457
2014
5,667,175
1070304
RM(00
0)
YEA
R
Singapore UOB
RM
(000)
YEA
R
From the UOB Banks analysis, the interest based income is increasing gradually from
year 2000 to 2014, because of the growth of loan and improved loan pricing in an
increasing interest rate environment of UOB Bank.
Besides that, for the non-interest income, it increases from year 2000 with RM1704000
and reached the highest level of RM2127000 in 2006 but then start to have a decline in
year 2006 to year 2008, which are RM1675000. After that it drops a lot from year 2009 to
2010, RM1732000 to RM811000 due to decline in fee income. And later in the following
years, the flow of non-interest income is more stable and steady, mainly contributed by
steady fee income and higher trading and investment gains. This also represents a
relatively faster recovery for UOB Bank.
So, we found that the bank generated more interest based income than non-interest based
income for UOB Bank.
45000
40000
35000
30000
25000
20000
15000
10000
5000
0
140000
120000
100000
80000
60000
40000
20000
0
INTEREST BASED
INCOME
NON-INTEREST BASED
INCOME
Besides that, for the non-interest income, it increases steadily from 2001 to 2013, due to
increase in fee & service income, income from subsidiaries and gains on investment.
So, we found that Siam Commercial Banks interest income is more than the non-interest
income.
3,000.00
2,500.00
KRW (in
Billions)
2,000.00
1,500.00
1,000.00
NON-INTEREST BASED
INCOME
500.00
0.00
CONCLUSION
In conclusion, five banks in different country are generated more interest based income
than non-interest based income. The interest income is roughly twice the rate of noninterest income. The main received of interest income is from earning on deposits at
banks and credit unions, on money market funds, on bonds, and on loans.
However, from the analysis we can found that most of the banks (Malaysia, Thailand, and
Australia) were well into millions of dollars from non-interest income in recent years,
which indicates the non-interest income is growing. Nowadays, non-interest income is
very important for bank to move from old traditional interest income into a major
contributor of bank revenue. These sources of income have a great growth and significant
in non-interest income.
Discuss whether the impact of macro and regional economic effects on banks noninterest based activities such as BASEL rules and regulation.
Non-interest incomes (also referred as fee income) for a bank are mainly income
from service charges on account they hold and interest charged for the loan they granted.
Unlike the interest income, this income is basically unaffected by regional economic and
financial market cycles and is usually not controlled by rules and regulation. Non-interest
income is less likely to move in synch with economic variables such as interest rates or
gross domestic product (GDP). The regional economic effects might only have the impact
on non-interest based activity due to the level for financing in the country and also the
banks specifications. The interest rates may be different between the countries, where the
risk for finance also different in number. The competitors also considered the impact for
non-interest finance, the commercial bank, the finance firm or others.
Discuss whether the impact of the banks non-interest activities by firms in different
countries.
The banks non-interest activities by firm will be affected while in different country. As
the research that we have done, the five countries are Malaysia, Singapore, Australia,
Thailand and Korea, based on the result of the non-interest activities from the Banks
Annual Report, shown the figure differently.
Standard Chartered Bank ( Malaysia )
Based on the graph of Standard Chartered Bank ,the non-interest activities illustrate a up
and down between the year 2000 to 2006. Then continue raise from the year 2007 until
the latest year 2014.
UOB ( Singapore )
Based on the result of research for UOB in Singapore, from year 2000 to 2006 keep
increases but slightly drop from year 2006 to 2008. However a huge decline appears from
the year 2009 to 2010. Then keep stabile from the year 2011 until the latest year of 2014.
Commonwealth Bank ( Australia )
In Australia, the non-interest activities increase continuously from the year 2000 until
2014 the latest.
Therefore, upon the result shows, the non-interest activities may be affected due to
different countries. For example, the Commonwealth Bank and Siam Commercial Bank
present a nice figure for non-interest activities without drop. Whereas Malaysia,
Singapore and Korea, the results are fluctuated but still increasing in last few years. Noninterest income and bank performance differs due to differences in country income levels
and bank specifications. Non-interest income increases risk for banks in high income
countries, but reduces risk for middle and low income countries.
Discuss whether the non-interest activities and the bank performance and bank risk.
Non-interest activities
Any type of income that is generated from the application of fees, rather than from
interest that is applied to the outstanding balance of a financial account. Income of this
type is often associated with financial institutions, particularly banks and credit card
companies. In some cases, the non-interest income is associated with recurring fees that
are assessed on customer accounts each month. At other times, the fees are one-time
charges that are applied in return for some type of specific task or service that is provided
by the account issuer.
Bank performance
Bank performance is refers to the bank earning and the financial performance for the
year. While every condition remains, the increase of non-interest income will improve
bank earning but will also change the financing structure. Bank efficiency is measured by
each banks relative financial performance, calculated as the bank return on assets minus
the average return on assets of the other banks. Non-interest income doesnt used to
effect on the performance and risk of bank.
Bank risk
There were few risks which will affect the bank if it depends solely on the interest based
income. Credit risk will be one of the risk because interest based income is mostly from
loan, and if a bank only based on this loan services, they may face uncertainty that their
customer default and will not be able to pay back the loan due to many reasons like
bankruptcy. Besides that, liquidity risk is another risk which the bank may face.
Furthermore, interest rate risk is another main risk that a bank will face if they depend
solely on interest based income. When the interest rate drops, the interest based income
services of a bank will generate lower income. Market risk is another risk which will
affect a bank, because market risk cant be eliminated. If market faces recession, all the
industry will be affected including banking services. When the market is in bear market, a
bank which depends solely on interest based income will be seriously affected because
investors or customers will not willing to borrow money or loan from bank to invest.
Therefore, these are the risk to a bank if it solely depends on interest based income only.
APPENDIX
STANDARD CHARTERED (MALAYSIA) Income Statement for the year ended 31 MARCH 2015
https://www.sc.com/my/assets/pws/pdf/GP-8-Mar-15.pdf
UOB BANK (SINGAPORE) MANAGEMENT DISCUSSION AND ANALYSIS
http://www.uobgroup.com/assets/pdfs/investor/annual/UOB_Annual_Report_2014.pdf
COMMONWEALTH BANK (AUSTRALIA) Consolidated Income Statement for the year ended
December 31, 2013
http://www.scb.co.th/en/getfile/15/annual
Hana Bank (Korea) Comprehensive Income Statement by Subsidiaries
file:///C:/Users/Dell/Downloads/Hana_Financial_Group_AR_2014_7.pdf
REFERENCE
1. Investopedia, 2015, Non-Interest Income, viewed 18 July 2015. Available from
http://www.investopedia.com/terms/n/noninterest-income.asp
1. William Perez, 2015, Interest Income, viewed 19 July 2015. Available from
http://taxes.about.com/od/income/qt/interest_income.htm
3. wiseGEEK, 2015, What is a Non-Interest Income, viewed 19 July 2015. Available
from http://www.wisegeek.com/what-is-a-non-interest-income.htm
4. Wintersteen, 2007, Developed vs. Developing Countries, viewed 19 July 2014.
Available from http://www.slideshare.net/wintersteen/developed-vs-developing-countries
5. The Wall Street Journal, 2015, Malaysia: Standard Chartered Annual Income
Statement, viewed 19 July 2015. Available from
http://quotes.wsj.com/UK/XLON/STAN
6. MarketWatch, 2015, HSBC Annual Income Statement, viewed 19 July 2015. Available
from http://www.marketwatch.com/investing/stock/uovef/financials/cashflow11
7. Hana Bank (Korea), 2015, Financial Information, viewed 19 July 2015. Available
from http://www.hanafn.com/eng/ir/financial/statements/balanceDetail.do
8. Non-interest income and financial performance at commercial banks in Barbados, viewed 19
July 2015. Available from file:///C:/Users/user/Downloads/Craigwell-R.-Maxwell-C.2006%20(1).pdf