Sample Thesis Paper

The gross spread ratio for banks is the same in nature and technicality as the gross profit margin for non banking corporations. In the case of banks, which are service providers, there is no Cost of Goods Sold. Rather, there is Interest Earned (Sales) and Interest Expensed (Cost of Goods Sold). Subtracting the latter from the former gives us the figure of Interest Income (Gross Profit). The Interest Income (Gross Profit) is divided by the Interest Earned (Sales or Revenue) to achieve the Gross Spread (Gross Profit Margin).

The annual reports of both MCB Bank and HBL Bank are the sources of the subsequent data. The gross spread for MCB Bank for the year ended 2008 was 71.05% as compared to 75.26% for the year ended 2007. The gross spread for HBL for the year 2008 was 58.27% as compared to 69.76% for the previous year. The gross spread for MCB was therefore higher than HBL in both years and the gross spread for both banks has fallen in 2008 as compared to 2007. MCB is obviously making more sales as compared to incurring expenses than HBL, although in Rupee value HBL has higher sales but also proportionately higher interest expenses. MCB is the more efficient of the two banks in terms of the gross spread ratio.

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