Answer-first summary for fast verification
Answer: improved.
**Analysis of the metrics:** 1. **Tier 1 Capital Ratio**: Remained unchanged at 14%, indicating no change in capital adequacy. 2. **Net Stable Funding Ratio (NSFR)**: Increased from 110% to 115%. NSFR measures the stability of a bank's funding sources relative to its funding needs. An increase indicates improved liquidity position as the bank has more stable funding relative to its required stable funding. 3. **Provision for loan losses to net loan charge-offs**: Decreased from 1.5 to 1.0. While this ratio relates to credit risk rather than liquidity, the decrease suggests the bank is provisioning less relative to actual charge-offs, which could indicate improving credit quality. Since the NSFR has improved significantly (from 110% to 115%), the bank's liquidity position has most likely improved.
Author: LeetQuiz Editorial Team
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An analyst gathers the following information about a bank:
| Metric | Current Year | Prior Year |
|---|---|---|
| Tier 1 Capital Ratio | 14% | 14% |
| Net Stable Funding Ratio | 115% | 110% |
| Provision for loan losses to net loan charge-offs | 1.0 | 1.5 |
The bank's liquidity position has most likely:
A
declined.
B
remained unchanged.
C
improved.
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