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    This document discusses key concepts for commercial bank management including balance sheets, income statements, and profitability ratios. A balance sheet lists a bank's assets and liabilities, with the most important assets being loans and investments and the most important liabilities being deposits. An income statement shows a bank's revenues and expenses over time to calculate net income. Profitability ratios like return on equity and return on assets are important indicators used to analyze a bank's performance. Exercises are also provided to help understand and apply these fundamental banking concepts.

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    This document discusses key concepts for commercial bank management including balance sheets, income statements, and profitability ratios. A balance sheet lists a bank's assets and liabilities, with the most important assets being loans and investments and the most important liabilities being deposits. An income statement shows a bank's revenues and expenses over time to calculate net income. Profitability ratios like return on equity and return on assets are important indicators used to analyze a bank's performance. Exercises are also provided to help understand and apply these fundamental banking concepts.

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    Commercial Bank Management - Chapter 1 - Part 2

    Uploaded by

    hung nguyenhuy
    This document discusses key concepts for commercial bank management including balance sheets, income statements, and profitability ratios. A balance sheet lists a bank's assets and liabilities, with the most important assets being loans and investments and the most important liabilities being deposits. An income statement shows a bank's revenues and expenses over time to calculate net income. Profitability ratios like return on equity and return on assets are important indicators used to analyze a bank's performance. Exercises are also provided to help understand and apply these fundamental banking concepts.

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    COMMERCIAL BANK MANAGEMENT – CHAPTER 1 – PART 2

    Question 1: Balance sheet


    1. What is a balance sheet?
    2. What are the principal accounts that appear on a bank’s balance sheet?
    3. Which items (accounts) are most important and which are less important on the
    asset side of a bank’s balance sheet?
    4. What are primary reserves & secondary reserves, and what are they supposed to
    do?
    5. Which items (accounts) most important on the liability side of a bank’s balance
    sheet? What is its characteristic?
    6. What are the essential differences among demand deposits, savings deposits,
    and time/term deposits?
    Question 2: Income statement
    1. What is an income statement?
    2. How to calculate net income?
    3. In rank order, what are the most important revenue & expense items on an
    Income Statement & why?
    Question 3: Relationship between Balance sheet & Income Statement
    1. What is the relationship between the Provision for loan losses on the Finance
    Statement and Allowance for loan losses on its Balance Sheet?
    2. What is the relationship between Balance sheet and Income Statement of a Bank?
    Question 4: Profitability Ratios
    1. What are 7 banking key profitability ratios/Indicators & its fomulas &
    meanings?
    2. Using Dupont Formulas 2 Components & 3 components to analyze return on
    Equity Capital of a Commercial Bank.
    3. What are the principal components of ROE, and what does each of these
    components measure?
    4. What are the most important components of ROA, and what aspects of a bank’s
    performance do they reflect?
    Question 5: Exercises
    1. Exercises 3, (page 156)
    2. Exercises 11 (page 159 )
    3. Exercises 5,6,7,8,9,10,12,13 (page 194-196)

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