The essence of the bank's profits and the basic principles of management

Also note that the profit is characterized not all income received in the course of business, but only that part which is "cleansed" from the costs of implementing this activity. At the same time gain a value indicator, expressed in monetary terms. This form of assessment of income related to the practice of the generalized cost accounting of all related key indicators - invested capital, income received, expenses incurred, etc., as well as with the current procedures for fiscal management. Given the general characteristics of its earnings as defined in the most general form can be formulated as follows: profit - is expressed in net cash income of the entrepreneur on invested capital that characterizes his reward for the risk run business and is the difference between total revenue and total cost in the process perform this activity. Highly profitable role in the development of the bank and ensuring the interests of its founders and staff determines the need for effective and continuous management. Office of profit - the development and management decision-making on all major aspects of its formation, distribution and use in the bank. The main goal is to gain control of maximizing the welfare of the founders, members of the Bank in the current and future periods. Based on this primary objective, the control system gains should address the following objectives: 1. Providing the amount of profit maximization, which is formed according to the resource potential of the bank and market conditions. This task is accomplished by optimizing the composition of the Bank's resources and ensure their efficient use. The main limitations of the profit is the highest possible level of resource potential and the current financial market conditions. 2. Ensuring the optimum proportion between income and an acceptable level of risk. Between the two rates is directly proportional relationship exists. Given the ratio of managers to risk their allowable formed defining an aggressive, moderate or conservative policies of certain activities or of certain operations. Starting from a given level of risk while driving should be maxed out the corresponding level of profits. Category: Management Operations Commercial Bank | Tags: Earnings