4LectureFSofbank10

4LectureFSofbank10 - Profitability of Depository...

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1 Profitability of Depository Institution The Bank Financial Statements Objective of the Bank Profitability Valuation
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2 1. Balance Sheet Summary Liabilities Demand Deposits(Checking acct ) 5-10% Savings and Notice Deposits 10-15 Term Deposits (CD, GIC. .) 40-45 [Retail CD<100 K, whole sale≥100K] Non-Deposit Obligations 20-25 - Repo, CP, Discount Borrowing, Debenture, Short Sale, Insurance, BA Equity ( CE, PS, R/E)
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3 High Leverage Banks are highly leveraged compared to corporation But Corporations pay an increasing rate with higher leverage which limit their borrowing
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4 Assets Cash Reserves 5-10% - Vault Cash - Deposits with other banks - Deposits with BOC Securities 15-20 - Govt Sec, Corp Debt, Repo - Equities Net Loans 50-60 - Consumers, firms,Callable loans - Mortgages Other Assets: BA, fixed and other assets
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5 Off Balance Sheet Off B/S Accounts are those accounts recording contingent claims, such that, when a contingent event occurs occurs, this item moves into the accounts….
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6 Credit Substitutes and Derivatives
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4LectureFSofbank10 - Profitability of Depository...

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