Professional Documents
Culture Documents
- NBFI loans and advances provide better returns and share the market, thus investment is
lower.
- Low SOCB loans and advances due to high fraud and NPL rates
- IDCOL's company is unique, with financing from a select 10–12 institutions and heavy
borrowing.
HSBC has discontinued offering retail banking, hence deposits are minimal.
Banking Control
- Financial statements produced in accordance with Circular BRPD 14 differ from those
produced in accordance with IFRS (local law should take precedence over the international
standard).
- Money divided between cash on hand, cash in BB, and cash in agent bank (cash includes
vault, ATM)
- The foreign exchange rate is quoted 15 days prior to the conclusion of the fiscal year.
- Since banks purchase near money marketable securities as investments, cash does not
contain them; yet, companies record them in cash (as opposed to IFRS).
- Off balance sheet expenses such as warranty fees and potential litigation costs are common
(examples: BAT, GP, SAMSUNG).
Because banks provide several guarantees and the cumulative size of these items is large (for
example, LC), it has become obligatory for banks to hold high off-balance sheet items, which
are often 100 times larger.
- The World Trade Centre caused the collapse of 17 insurance companies (high off balance
sheet items).
- In keeping with the conservative principle, liabilities make up the only side of an item off the
balance sheet.
- A classified income statement is used to understand the details, identify the portions that come
from core operations and those that come from other sources, obtain performance indicators,
and determine the significance of those indicators based on the circumstances (for example, a
shareholder may place emphasis on net income, a banker may place emphasis on EBIT, and
an operational manager may place emphasis on GP).
- United Finance 2011 overstated financial statement as a result of stock market performance,
non-recurring
- The bank's treasury department collaborates with asset liability management (ALM), with the
goals of profit maximisation (ensuring a level of earnings) and balance sheet stability (making it
shockproof).
- How to reduce operational costs: increase the number of current accounts on hand or keep a
less expensive source of funding; as a result, the CASA (current and saving account) ratio is
crucial (lower deposits will have a negative impact on the equity multiplier).
EBL and DBBL are examples of solid banking with a good casa ratio, but they have a poor
treasury.
- The trade-off between profitability and risk, as higher profitability raises risk (thus SCB's
stringent credit policy).
- Since a lower rate of loans and advances entails a reduced risk but also a lower level of
profitability, good banks have low deposit rates.
Interest Earnings
Interest-related costs
(-) OPEX
Provision (-)
= Net Profit