Next, the minimum allowable

Minimum level of non-interest expenses - is that part of the fixed costs, carried out by budget item to support the functional activities of the bank. Correction of these articles is based only on changes in external factors (increase in tariffs, the cost of rent, etc.) and is independent of the bank's financial condition. According to the current banking practices in such expenditure, as a rule, include: maintenance costs of transport, the cost of protecting bank lease of fixed assets, operating expenses, postal and telegraph and telephone charges, etc. All other articles administrative costs can be optimized. The next step is to determine the maximum possible level of spending based on analysis of financial condition. The ceiling of expenditure - is the maximum level of non-interest bank expenses, conduct which would ensure a given level of profitability of the bank over the forecast period. After the planning phase, summarizes which are the foundation of the Bank's decision to optimize the cost structure as a whole. With the positive results of planning - forecast the formation of profit than enough - the analysis and optimization of the balance of planned spending, resulting in species of articles in non-interest expenses to be optimized. Provided a negative financial result of the bank on the basis of planning (or its lack of a positive value), as a rule, analyzes the causes and sources of low profitability. Category: Fundamentals of Financial Management Bank | Tags: Non-interest expenses