Portfolio Management of Commercial Banks.pptx - Portfolio Management of Commercial Banks Aim of the Commercial Bank \u2022To earn PROFIT \u2022 Which depends

Portfolio Management of Commercial Banks.pptx - Portfolio...

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Portfolio Management of Commercial Banks
Aim of the Commercial Bank To earn PROFIT Which depends on INVESTMENT
Definition What is Portfolio Management (PM) PM is the art and science of making decisions - about investment mix and policy, - matching investments to objectives, - asset allocation for individuals and institutions, and - balancing risk against performance. PM is all about determining strengths, weaknesses, opportunities and threats in the choice of - debt vs. equity, - domestic vs. international, - growth vs. safety, and - many other trade-offs in course of optimizing return ()
Definition… PM refers- prudent management of a bank’s assets and liabilities for optimum combination of INCOME, LIQUIDITY, AND SAFETY
OBJECTIVES OF THE PM TO Achieve an APPROPRIATE LEVEL OF LIQUIDITY SAFETY & INCOME/PROFIT
LIQUIDITY BANKS want to keep a small proportion of its assets in cash. - BUT liabilities are payable on demand at a short notice. Keeping liquidity the uppermost- makes PROFIT low IGNORING LIQUIDITY AND TARGETING MORE PROFIT IS DISASTROUS BALANCING between the objectives of liquidity and profitability is INVESTMENT PORTFOLIO MANAGEMENT
LIQUIDITY

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