The main objective of cost management

The main objective of cost management - the creation of a mechanism to optimize the cost of the bank, bring them in line with the selected return. This mechanism should be the basis for profitable work each banking division at any given time and thus reduce dependence on bank market situation. The basis of cost management in the bank - their planning, whose goal is to establish the amount and the costs of the bank during the planning period of structural units and in general for the bank. Planning costs of the bank in several steps: 1. Analysis of costs in the pre-planning period. The main objectives of this analysis is to identify key trends in the amount and level of expenses in the bank's pre-planning period, setting the size of the deviation of actual performance against plan, identify the main causes of these abnormalities. In the first stage examines the dynamics of the total costs and the level of pre-planning period are determined by the rate of change of these indicators are calculated rates of absolute and relative deviations with respect to the previous period. In the second stage of analysis are considered indicators of the dynamics of individual items of expenditure. This analysis is complemented by the study of the dynamics of individual share of expenditures in their total volume. In the third stage is considered the level of implementation of the planned cost of banking services. The results of this analysis are necessary to adjust the plans for the provision of services and prices. In the fourth stage is determined by factors that have caused changes in the costs of the bank. Such an analysis is carried out by the bank as a whole and according to responsibility centers. Topic: Fundamentals of Financial Management Bank | Tags: cost control