Presented by

9164 Jenovah Carl Fernandes

9117 Ashwini Jadhav
9108 Amit Bhamare


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Balance Sheet
Of
A bank

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A Snap Shot

A photograph of financial worth of
the concern at certain time.

The study of the balance sheet reveal
whether the business of the
bank is healthy and growing and
has a promising future or not
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What is Balance Sheet
Liquid Assets
Loans
Marketable Securities
Investment Securities
Fixed Assets
Accrued Interest
Other Assets
Total Assets
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Cash included cash in hand and RBI including
foreign currencies and balances with other
banks.
Cash is kept in hand by the banks to meet the
demand and obligation of the customer.

Cash is the primary reserve or first line of
defense against depositors

The banks advance short term loans to their
customers.
These loans are advanced on a normal
interest with the promise that these will be
returned to the bank on short notice
The amount advanced for short period is
called money at call and at short notice and is
regarded.


The bank invest funds in the govt. securities.

bonds, gold or other profitable commodities
or instrument for short and long term
investment

The investment in these items are quite liquid
and profit yielding
The advances includes loans, cash credits,
overdrafts, bills discounted.

Advances are the largest items on the assets
side of the commercial bank.

These advances have high yield but low
liquidity
Deposits
Bank Borrowings
Accrued Expenses
Other Liabilities
Shareholders Equity
Total Liabilities
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Fixed deposits and saving ,etc

Liabilities Borrowing
This is the amount which the bank borrows
from RBI.

Loans may be obtained against securities.

Share Capital
Reserves
Retained Earnings
Revaluation Surplus
Share Premiums
Net Income
Total S/H Equity
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The bank raises capital from its shareholder
and the sale of ordinary shares.

Reserves

This is the amount which is accumulated over
the years out of net undistributed profit.



That tries to give maximum profit to the
shareholders.

That lends rationally.

That give security to their depositors


Interest Rates
Interest Sensitivity
Due Dates
Foreign Currency
breakdown
Collateral
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AMEL
This system was adopted in India since
1995
Under this system the rating of individual
banks is done along five key parameters.
Each of the five dimensions of performance
is rated on a scale of 1 to 5, varying from
fundamentally strong bank to
fundamentally weak bank.
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Capital Adequacy
Asset Quality
Management
Earnings
Liquidity
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The Capital of a
Bank protects the
Bank against
unexpected future
losses.
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CAPITAL ADEQUACY
1. Is level of capital high enough ?
2. Is capital growing proportionate to
assets ?
3. Can additional debt be raised if needed
4. Is there pressure to pay high dividends

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1.
Shareholders Equity
-----------------------------------
Total Assets

The ability of the present Capital to support
the further growth of Assets
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2.

Shareholders Equity
------------------------
Risk Weighted Assets
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TIER ONE CAPITAL:
Which can absorb losses without a bank being
required to cease trading

Tier I Capital = Ordinary Capital+Retained
Earnings& Share Premium - Intangible assets

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TIER TWO CAPITAL : Which can absorb losses
in the event of a winding-up and so provides
a lesser degree of protection to depositors.
Tier II Capital = Undisclosed
Reserves+General Bad Debt Provision+
Revaluation Reserve + Subordinate debt+
Redeemable Preference shares


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4.

Total Debt
--------------------------
Shareholders Equity

The ability to raise additional Debt Capital
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5. Financial Leverage :

Total Assets
-----------------------
Shareholders Equity
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6. Capital Formation Rate :

Retained Net Income (RNI)
------------------------------
Average Shareholders Equity

RNI = Net Income - Dividends to be paid
The internal growth of Equity Capital
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Minimum requirements of capital fund in
India:
* Existing Banks 09 %
* New Private Sector Banks 10 %
* Banks undertaking Insurance business 10 %
* Local Area Banks 15%


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Asset quality is another important aspect of
the evaluation of a banks performance under
the Reserve Bank of India guidelines.
Bank managers are concerned with the quality
of their loans since that provides earnings for
the bank. Loan quality and asset quality are
two terms with basically the same meaning.

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ASSET QUALITY
1. Are net charge - off s reasonable ?
2. Is management slow to charge off loans?
3. Is loan growth reasonable ?
4. Is loan loss reserve level adequate ?
5. Do earnings comfortably cover loan
losses ?

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1.

Loans
------------------
Total Assets
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2. Non Performing Loans =
a) Loans past due more than 90 days
b) Loans not accruing interest
c) Loans with low interest rates
d) Loans on which repayment terms
have been renegotiated.
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3. Non Performing Loans
------------------------
Total Loans

Indicates how much of the loan portfolio is
non performing.
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4. Reserves for Non Performing Loans
--------------------------------
Non Performing Loans

Indicates the ability of the loan loss reserve to
absorb potential losses from currently non
performing loans.
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5. Loan Loss Provision
--------------------
Average Loans

Shows current income reduction in
anticipation of loan losses.
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6.
Interest Earning Assets
---------------------------
Total Assets

7. Non Interest Earning Assets
------------------------------
Total Assets

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A bank can not sustain itself long without a
positive cash flow.

Earnings are essential to :
1.Absorb loan losses
2.Finance internal growth of capital
3.Attract investors to supply capital

EARNINGS

1. Are earnings at an adequate level ?

2. Does valid reporting exist for earnings?

IF POOR, ASCRIBABLE TO :
1. Low asset yield
2. High cost of funds
3. Inadequate non interest income
4. High loan charge off s
5. High loan loss provisions
6. Mismanaging taxes
7. High overhead costs

IF STRONG, ASCRIBABLE TO :
1. Strong asset yield
2. Low cost of funds
3. Adequate non - interest income
4. High loan charge off s
5. High loan loss provisions
6. Adequate taxes
7. Low overhead costs

1. Return on Assets ( ROA )
Net Income
---------------------------
Total Average Assets

2. Return on Equity ( ROE )

Net Income
----------------------------
Average Shareholders Equity

3. Net interest margin

net interest Income
--------------------------
Average Interest Earning Assets

4. Net non interest income

Non interest income- non interest expenses
-------------------------------------
Total average assets


5. Operating expense ratio

Total Operating Expense
--------------------------------
Total Operating Income

6. Efficiency Ratio

Non Interest Expense
----------------------------
Net total income
10. Interest Rate Sensitivity Gap :

Interest Rate Sensitive Assets
(-)
Interest Rate Sensitive Liabilities

11. Interest Rate Sensitivity Gap Ratio :

Interest Rate Sensitive Assets
---------------------------------
Interest Rate Sensitive Liabilities






A class of financial metrics that is used to
determine a bank's ability to pay off its short-
terms debts obligations.



LIQUIDITY

1. Is bank dependent on bought money ?
2. Is core deposit growth proportionate
to asset growth ?
4. Is volatile funds significant to assets?

1.Loan- deposit ratio
Loans
-----------------
Deposits

2.Liquid assets ratio
Liquid Assets
--------------
Deposits

3. Liquid Assets
--------------------
Large Liabilities


Measures the assets readily available to cover
a loss of large liabilities.
5. Core Deposits
----------------------
Earning Assets

Indicates the extend to which earning assets
are funded by those deposits considered
stable and not subject to interest rate
disintermediation.




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