Introduction

Introduction (5) Bank financial statements (1) Balance Sheet (B) Liabilities • Two major categories of liabilities are included in the balance sheet: (1) Deposits made by and owed to various customers . (2) Non-deposits borrowing of funds in the money and capital market. Dr. Amr Nazieh

Introduction (5) Bank financial statements (1) Balance Sheet (B) Liabilities (1) Deposits made by and owed to various customers. • Deposits are the main source of funding for banks. • There are four kinds of deposits: (1) Demand deposits: represent customer deposits in regular checking accounts that do not pay interest. Dr. Amr Nazieh

Introduction (5) Bank financial statements (1) Balance Sheet (2) NOW accounts (Negotiable order accounts): represent checking accounts that pay interest. (3) Saving deposits: represent the traditional saving accounts that bear the lowest rate of interest. (4) Time deposits: represent high-yielding saving certificate offered by banks and usually carry a fixed term and a stipulated interest rate. Dr. Amr Nazieh

Introduction (5) Bank financial statements (1) Balance Sheet • Summary of deposit account: • Noninterest-Bearing Demand Deposits or regular checking account • Savings Deposits (bear the lowest interest rate) • Now Accounts (Individuals and not-for profit) • Time Deposits (certificate of deposits) Dr. Amr Nazieh

Introduction (5) Bank financial statements (1) Balance Sheet (B) Liabilities (2) Non-deposits borrowing of funds in the money and capital market. • Represent the banks temporary borrowing in the money market, mainly from reserves loaned to the bank by the Central bank in Egypt. • These transactions are carried out mainly to supplement deposits and provide the additional liquidity that cash assets and securities cannot provide.

Introduction (5) Bank financial statements (1) Balance Sheet (C) Owners’ Equity • Equity capital: or the shareholders’ equity supplies the long-term and relatively stable base of financial support upon which the bank will rely to grow and to cover any extraordinary losses it incurs.

Introduction (5) Bank financial statements (1) Balance Sheet • Owners’ equity includes the following: (1) Preferred Stock (2) Common Stock • Common Stock authorized and Outstanding (3) Capital Surplus. (4) Retained Earnings (Undivided Profits). (5) Treasury Stock. (6) Contingency Reserve.

Introduction (5) Bank financial statements (1) Balance Sheet • Liabilities and equity capital represent accumulated sources of funds, which provide the needed spending power for the bank to acquire its assets. • On the other hand, a bank’s assets represent the accumulated uses of funds, which are made to generate income for shareholders, pay interest to depositors, and compensate the bank’s employees.

Introduction (5) Bank financial statements (1) Balance Sheet Accumulated uses of funds (Assets) Accumulated sources of funds (liabilities and equity capital)

Introduction (5) Bank financial statements (1) Balance Sheet • Extended accounting equationsC + S + L + MA = D + NDB + CA • C = Cash Assets • S = Security Holdings • L = Loans • MA = Miscellaneous Assets • D = Deposits • NDB = Nondeposit Borrowings • CA = Capital Accounts

Bank Misr - Balance sheetDec. 31, 2005

Assets

Liabilities

Stockholders’ equity Dr. Amr Nazieh

Introduction

Introduction

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Introduction to introduction to introduction to … Optimization

INTRODUCTION/ INTRODUCTION

Introduction

INTRODUCTION

Introduction

Introduction