Financial liabilities: analysis, structure. Passives are

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Liabilities are operations that form bank resources. For every commercial institution, they are very important. First, the bank's reliability factors are the stability of resources, their structure and size. Secondly, the price of resources also affects the amount of profit. Thirdly, the cash base determines the volume of active operations that generate income for the bank.

The concept of liabilities of a financial institution

What is this? Passive operations play a very important social and economic role: they collect temporarily free funds of the population and enterprises, which allows meeting the needs of the economy in working and fixed capital, investing money (savings) in investments, and providing loans to the population. Income from deposits and debt securities can partially cover the population's losses from inflation. The bank's liabilities are: share premium, profits, funds, authorized capital. This also includes other groups. These are additional and reserve capital, assetsinvestors, retained earnings, household deposits.

Structure of liabilities

Now let's move on to a more detailed consideration of the classification of funds of financial institutions. Bank liabilities are divided into two groups.

The first is the obligations of a financial institution to creditor banks and depositors (the so-called passive lending operations). Everything is clear here. According to these operations, the bank acts as a borrower, and customers act as lenders.

The second group includes operations that generate their own resources that do not require a return. Everything is just as simple here. In other words, these are own and borrowed funds.

Analysis of the liability of a financial institution

What is its purpose? They analyze the liabilities of banks to determine their place in the structure of state and non-state institutions. Financial liabilities include comparison of projected indicators with their calculated characteristics. In the analysis, a distinction is made between the bank's own funds and attracted "out-of-bank" money. Their ratio must be greater than one. If this indicator is lower, then there will be a risk of not returning the capital invested by investors in this bank.

The Department of Financial Institution, Audit and Internal Statistics, as well as accredited state bodies constantly monitor and analyze the liabilities of banking institutions. The attracted funds and their amount determines what percentage of a particular financial institution will occupy in the country's banking system. Toit functioned normally, this proportion should not exceed 10-11%.

Equity analysis

What is it and why is it carried out? The analysis of own funds can be hampered by the fact that the banking market is unstable. By regularly reviewing the bank's liabilities, some risks can be foreseen. And develop a further program to minimize them.

When analyzing equity, the following indicators are evaluated: dynamics, structure, composition of liabilities, comparison of equity using gross and net indicators, changes in additional and authorized capital. Such an analysis of liabilities gives an idea of the types, specifics and structure of the formation of sources of funds. And for this you need to analyze your own and borrowed capital. This is a qualitative and quantitative study. Based on such data, they draw conclusions about changes in the structure of liabilities, determine what their indicators are for a month, a year, several years. Due to this, it is possible to make a forecast about possible future investments and ascertain the stability of the enterprise.

Demand deposits in bank current liabilities

Current liabilities represent cash balances at the end of the trading day in customer accounts. These balances can be different and vary from zero to maximum values, since the material situation of the population is different and constantly changing. If we assume that suddenly there will be a reset for all accounts, then the current assets of the bank will also go into negative territory. Actually the riskthe occurrence of this situation is minimal, since the opening and closing of customer deposits is chaotic. Thus, current liabilities are a set of random and independent variables in the total mass of accounts.

Transformation of "short" funds into "long" funds

This happens by supporting the total mass of "short" funds by replenishing retiring resources.

As a result, an incompressible balance or amount of current liabilities is created, which the bank needs to maintain throughout its activities. After all, only in this case it will be possible to place it in permanent assets with a regular resource (net capital). That is why the continuous replenishment of current accounts and their constant increase is so important.

Raising current liabilities

If there is an increase in the volume of funds in customer accounts, it means that the level of confidence in banks increases, and therefore, there is a reason to expand the types of services provided to citizens. A significant role here is played by the "off-balance" departments of financial and credit institutions. The introduction of plastic cards and various payment systems to the masses creates good conditions for increasing the level of current liabilities.

Banks pay special attention to increasing demand funds for absolutely all categories of customers (individuals, legal entities). In addition to "card" projects, various "salary", "pension" and others are being introduced. They, in total, form a significant part of current liabilities. One of the features of such capital is the following: itand there is an integral and cheap part of the resources that allows the bank to form a significant interest margin. The main "cheap" resources of the institution are just current liabilities, as they help to reduce interest rates on lending services.

Varieties of liabilities

Since liabilities are also obligations of enterprises (financial), they are formed at the expense of loans. In this regard, there are short-term and long-term liabilities, depending on the period of crediting. How are they different?

Short-term liabilities provide for the repayment of loan debt within one year (for example, bank overdraft, various trade loans).

Long-term can be repaid over several years (lease debt and various types of loans).

Liabilities in the balance sheet

Liabilities are an integral part of the balance sheet. They reflect all the receipts of the bank's funds. Current or short-term liabilities are shown higher on the balance sheet. They can exist within the same production cycle. Everything is simple here. Accordingly, long-term obligations are not fulfilled in one production cycle. Assets and liabilities in the balance sheet must always be in balance, and the difference between their sum is the capital (own) of the owner of the company. This is a very important indicator. The mentioned value may reflect the balance of the owner's capital, ifsale of all assets, and the proceeds will go to pay off debts. In other words, if assets are a kind of property of the company, then financial liabilities are the capital from which this property was formed. All assets and liabilities are reflected in the company's balance sheet. It is compiled for each given (certain) reporting period.