Ratio Analysis- discuss comparative risk Essay Example | Topics and Well Written Essays - 500 words

Ratio Analysis- discuss comparative risk - Essay Example It remains around 30 for all these years (except 2009) which is a good sign for the company. As far as interest risk ratio for 1-year gap is concerned, it is also stable (except 2009) around 32. It means that the company will not fear from its interest rate risk as it is not increasing consistently. The capital adequacy risk appears to be fair enough to cover unforeseen losses and obligations of the bank towards the investors. For the five years, the ratio is almost constant (except for 2010) which means that the risk for being unable to discharge its obligations is not increasing showing a positive sign for the company (Exhibit 4). Comparing the ratios of PNC limited with its peer group, it seems quite clear that the company’s performance is better than the peer group with respect to credit risk ratio, interest risk ratio (both 1-year and 3-year gap) and capital adequacy ratio. However, PNC requires working with its liquidity ratio to have an advantage over its peer group. PNC needs to improve its liquidity ratio to have complete advantage over its peer. For this purpose PNC will have to adopt some measures to recollect the amounts lent to those who appear to be bad debts. Further, the company needs to take steps to collect cash amounts in lieu of interest on loan expanded by it to customers. The company should also withdraw some of its less earning investments. Further, PNC should revise its policy for its current regular interest paying customers to urge them pay as soon as possible. All these steps will enable the company to increase its liquidity and hence will be able to avoid any liquidity risk arising in the near future