BANK1005 Derivatives and Securities Markets
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Tutorial 6 (Week 7) – Financial Institutions 1
© HB, August 2007
Preparation for This Tutorial
You should complete your study for this tutorial by using the relevant lecture notes, textbook and
other resources. You will need your calculator during the tutorial. Have a good understanding of
the key words used in this tutorial.
In particular, for this tutorial you should:
Record the formula for the interest rate margin (IRM).
Complete at least some parts of the activities that you can.
Adelaide Bank Limited – Income Statement
“Adelaide Bank Limited is a publicly listed company with its head office in South Australia,
providing financial services through our distribution network and through national alliances.”
(Source: Adelaide Bank Limited, Annual Report 2003: 1)
We’ll study some of the information for the Adelaide Bank in this tutorial. I have taken this
information from the bank’s 2003 annual report. We’ll simplify some of the information for our
learning purposes, but the calculated results will be quite accurate!
Adelaide Bank Limited
Years Ended 30 June
Net interest income
Less: Fees to intermediaries
Total operating income
Bad and doubtful debts
Operating profit before income tax
Income tax expense
Operating profit after income tax
Source: Adelaide Bank Limited, Annual Report 2003: 26 (Adapted)
What is the purpose of the income statement? What does it show? Why is it important?
Select some key items and think how these are different from those of another business such as an