The maximum level of expenditure

Therefore, in practice, to solve the problem of cost management must first develop the general principles of cost management and to determine the minimum required and maximum allowed level of costs, as well as mechanisms to optimize the use of resources allocated under expenditure. Economic assessment and management of interest expense is quite transparent. Control over them is only required to confirm the agreed rates, amounts and timing of involvement. Problems arise at the stage of approval rates when necessary to assess interest rate risk, interest margin for the creation of the necessary and sufficient income. This is due to the fact that the management of interest expense is slaboupravlyaemaya in terms of the bank, because their level is primarily influenced by the market environment, ie level of market interest rates and monetary policy of the NBU. The decrease may lead to abandonment of potentially profitable implementation of active operations, therefore, not in the best long-term development of the bank. In managing interest expense is desirable to optimize the structure of the resource base in order to increase the proportion of lower-cost resources. Determining the cost-effectiveness of non-interest expenditure is more difficult, because the very process of such a determination and taking into account not so transparent as to interest expense. Therefore there is a need to develop preventive measures for managing the bank's noninterest expenses to achieve cost-effectiveness of bank capital. Need an organization of cost management, in which all expenses of the bank would be economically justified, transparent, optimal, and brought the best effect with a payback period. At the initial stage should be sufficiently rigid to define the general principles of non-interest expenses to establish a clear organizational structure to manage costs, which would provide comprehensive and consistent implementation of measures to manage them. Topic: Fundamentals of Financial Management Bank