Accordingly, the specifics of the operations they perform, and their role in ensuring the stability of the monetary system. As a company working in the financial markets, the bank belongs to the category of enterprises - financial intermediaries and has operations in the money, credit markets and the securities market with the use of various financial instruments. These banks are significantly different from companies operating in the production and the lion's share of operations which account for the purchase of raw material, its processing and manufacturing of finished products and its implementation. It is known that the bank as a financial intermediary stands between the small lender - zaoschadnikom and borrower-investor, who has investment opportunities and helps to move funds from one to the other. Movement of funds banks are carried out with the use of financial instruments, the most common of which are deposits, loans and securities. To gain a holistic understanding of how business transactions are recorded in the bank's financial statements, it is necessary to explain the meaning of the term "financial instrument". Under the financial instrument to understand any contract in which there is a financial asset of one enterprise and a financial liability or equity instrument, an enterprise. Contract (Agreement) may be either in writing or orally. For example, the company, having temporarily idle funds in the amount of UAH 25 000, signed with the bank deposit agreement for a period of one month and transfers funds to the fixed deposit in a bank. Due to this operation, the enterprise appears in the balance of a financial asset in the form of a financial instrument, as posted in the bank deposit. Simultaneously, the bank's balance sheet, these funds are recorded as a financial liability (debt) to the customer by the bank deposits. Topic: The role of accounting in the management of the bank, its types and destination
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
The investment portfolio of the bank: the nature and function
Investment Banking and Securities to perform many important functions in the internal bank management, namely, provide an additional, distinct from credit source of income is especially important for management and shareholders when the income figures provided by drop, could be sold to the bank to obtain the necessary funds or used as collateral when borrowing additional funds, ie a source of liquidity and are used to limit the amount of cash reserves, helping to reduce the tax liabilities of the bank by investing in securities that are exempt from taxation can compensate the high credit risk portfolio of bank loans to purchase high-yielding securities, provide geographic diversification because securities are often associated with other regions than the bank credit facilities, are used as collateral in obtaining credit from banks and central bank the flexibility of the banking portfolio, because securities, unlike loans, may be readily purchased or sold for the restructuring of the bank's assets depending on market conditions ; improve the financial performance of banks' balance sheets due to the high quality of most of the securities held by the bank. Thus, the functions of the investment portfolio are as follows: revenue stabilization of the bank, regardless of the phases of the business cycle, compensation for credit risk portfolio of bank loans, providing geographic diversification, liquidity support, reducing the tax burden, the use of portfolio as collateral, the bank's insurance against losses due to changes in interest rates; Flexibility of the banking portfolio, improve the financial performance of banks' balance sheets due to the quality of the securities. When building an investment portfolio should be guided by the following considerations: security investments (investments invulnerable to shocks in the securities market), the stability of revenue; liquidity of investments (the ability to quickly and without loss in value to turn into cash). Category: Management Operations Commercial Bank
