1. Cost of capital [depend mostly on it's bond rating]
2. Decrease and Increase of CAR [since more loan they provide more the CAR will decrease] [it will also decline if asset quality drops]
3. NIM and spread increase or decrease
4. Operating Cost
5. ROA dilution [if they incur debt ROA will decrease] [ The ROA denominator – total assets – includes liabilities like debt (remember total assets = liabilities + shareholder equity). Consequently, everything else being equal, the lower the debt, the higher the ROA.] [ROA = Net Income/Total Assets]
6. ROE high/low [if they incur debt ROE will increase but ROA decrease, if they liquidate equity then ROE will decrease] [ROE= shareholders' equity ][shareholders' equity = assets - liabilities.]
2. Decrease and Increase of CAR [since more loan they provide more the CAR will decrease] [it will also decline if asset quality drops]
3. NIM and spread increase or decrease
4. Operating Cost
5. ROA dilution [if they incur debt ROA will decrease] [ The ROA denominator – total assets – includes liabilities like debt (remember total assets = liabilities + shareholder equity). Consequently, everything else being equal, the lower the debt, the higher the ROA.] [ROA = Net Income/Total Assets]
6. ROE high/low [if they incur debt ROE will increase but ROA decrease, if they liquidate equity then ROE will decrease] [ROE= shareholders' equity ][shareholders' equity = assets - liabilities.]
