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Balance Sheet
A bank
What is Balance Sheet
 A snap Shot.
 A photograph of financial worth of
the concern at certain time.
 Result Sheet of a concern base on

A Statement showing the financial
position of a bank on a
particular date by means of debit
and credit balance outstanding
after all the revenue and
expenses terms have been
transferred to the trading
account and the profit and loss
How to Prepare
 It is prepared in two separate
 One section is the liabilities
of the concern are recorded
 Second section is for assets
of the bank
 It shows its net worth as on a
particular date.
 Profitability of a bank is known by
studying the trends of profits over a
period of years.
 It shows the policy of the bank of
extending of credit to the customers,
 The profit retained by the bank are
also shown in the balance sheet.
 The balance sheet indicates the total
long term loans and debentures
liabilities and the assets charges as
securities for such borrowing.
In short the study of the balance sheet
reveals whether the business of the
bank is healthy and g rowing and
has a promising future or not
Balance sheet of the Bank
It reveals it financial position
The Shareholders, The Lenders and The
Depositors analyses the bank
A Good Bank
 That tries to give maximum profit to the
 That tries to reach the maximum level of
profit sharing for their depositors.
 That lend rationally and efficiently
keeping the economic viability and
 That give security to their depositors.
Assets & Liabilities in
Bank’s Balance sheet
Cash included cash in hand and with the
central bank of the country including
foreign currencies and balances with
other banks., Cash is kept in hand by the
banks to meet the demand and
obligation of the customer
Cash is the primary reserve or fist line of
defense against depositors
Money at call & at short notice.
 The banks advance short term loans to their
 These loans are advanced on a normal interest
with the promise that these will be returned to
the bank on short notice
 The amount advanced for short period is called
money at call and at short notice and is
The second line of defense
against the deposits
 The bank invest funds in the securities of the
federal and Provincial Government.
 The bank purchase fully paid up ordinary
 Participation term certificate or bonds, gold or
other profitable commodities or instrument for
short and long term investment
 The investment in these items
are quite liquid and profit yielding
 The advances includes loans cash
credits, overdrafts, bills discounted
within country or cross border.
 Advances are the larges items on the
assets side of the commercial bank.
 These advances have high yield but
low liquidity
Bills Receivables Being the bills for
Collection as per contract
 Bills for collection are those bills which are sent
by the people to the banks for collection.
 These bills are shown on the assets side as well
as liabilities section
 These are assets of the bank because the
amount has to be receive from the people
concerned at the maturity of the bills
 They are liabilities because the collection is to
be paid to the customer
Basic Liabilities for acceptance endorsement and
other obligation as per contracts

Premises less depreciation

Furniture fixture including vehicles
Other assets which includes stamps on hand
receivables form head office.

Non banking assets acquired in satisfaction of
Liabilities of a Bank

 The bank raises capital from its
shareholder and the sale of ordinary
 The amount of authorized capital issued
capital and subscribed capital from the
capital of the bank
Reserve funds and their reserves
 This is the amount which is accumulated
over the years out of net undistributed
 In Pakistan the banks are required to
transfer 20% of their net profit to Reserve
Funds until it is equal; to the paid up
 This fund strengthens the financial
soundness of the bank
Borrowing from other Bank
 This is the amount which the bank borrows
from the central bank of the country and from
outside the country.
 Loans may be obtained against securities or
merely on person security.
 Amount channelize to customer on Parking
 Under Syndicate financing with other banks.
Bill Payable
 It is the amount which the bank
recover on the basis of bills of
exchange from other branches or
from the head office.
 So long as these are not paid they are
shown on the liability sided of the
balance sheet.
Bills on Collection &
Bill Receivable
 Bills sent for collection are to be
paid on maturity to the customer.
The amount thus taken as
liabilities of the bank.
 Cheques under collection locally
or foreign fall under same
categories of liability.
Other Liabilities
Under this heading branch adjustment staff
welfare funds and other liabilities are shown

Acceptance Endorsement & Other

Profit & Loss Account
This item shows the amount of outstanding
balance of profit which is also taken as
inappropriate profit
Contingent Liabilities
This item shows the amount of claims
against the bank not acknowledge as
Debts, guarantees given on behalf of
directors, officers and customer

These are costs which the Bank have to pay
if a particular event take place.
 These are obligations generated by a separate
but uncertain event.

 These are not recognized as direct liabilities
 A common example of a contingent liability is
a bank guaranteed loan.

 At the time a guarantee is executed there is no
liability for the Bank, but since it is subject
upon the borrower failing to repay the loan the
guarantor shall adjust at first call.
Balance sheet structure
 Balance sheet structure that is
presented for just an example. It
does not show all possible kinds of
assets, equity and liabilities, but it
shows the most usual ones.
 Because it shows goodwill it could be
a consolidated balance sheet.
 Monetary values are not shown and
summary rows are missing as well
Balance Sheet
XYZ Bank Ltd.
Year ended 31 December 2006
 Investments held for trading
 Other current assets

Current Assets
 Cash and cash equivalents
 Marketable Securities
 Accounts receivable
 Inventories
 Prepaid Expenses

Fixed Assets (Non-Current Assets)
 Property, plant and equipment Less :
 Less Accumulated Depreciation
 Goodwill
 Other intangible fixed assets
 Investments in associates
 Deferred tax assets
 Current liabilities
 Accounts payable
 Current income tax liabilities
 Current portion of bank loans payable
 Short-term provisions
 Other current liabilities
 Long term Liabilities (Fixed
 Bank loans
 Issued debt securities
 Deferred tax liability
 Provisions
 Minority interest
 Equity
 Share capital
 Capital reserves
 Revaluation reserve
 Translation reserve
 Retained earnings