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Equity Leverage

Equity Leverage measures the proportion of the bank's net investments that has been funded by shareholders' equity. It gives an indication of how nuch of the bank's net loans have been sourced from the shareholders.

It is calculated as

(Interest Generating Assets - Provisions for bad and non-performing loans) / Shareholders funds

Interest Generating Assets = Cash + Treasury Bills + Short Term Investments + Long Term Investments + Customer Loans + Inter Bank Loans + Other Loans)

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Glossary Definition