Profitability of Commercial Banks Prepared by: Omasheva Azhar Gazizova Rufina Finance 241/242
Introduction In our work we will view what is mean banks, what types of banks we have, what is profitability, what profitability have our commercial banks. Banks - this is one of the most important links in the economic chain of the country and the world. The banking system provides continuous and high speed of the process of social reproduction, increases the efficiency of the entire production. One of the main objectives of the bank - cooperation in the transfer of money from lenders to borrowers and from dealer Online to the buyer. The transfer of money in the market, other than banks, are also involved in other financial institutions: insurance companies, broker-dealer firms, and so on. At the moment, Kazakhstan has a two-tier banking system: the first level - the National Bank of the Republic of Kazakhstan, the second level - commercial banks and other similar (similar) institutions. One of the features of commercial banks is that the main goal of commercial banks is making a profit (this is their "commercial interest" in a market system of relations). The term "commercial bank" originated in the early stages of development banking, where banks served primarily trading activity, barter transactions and payments. The main clientele of commercial banks were merchants. With the development of industrial production are having surgery short-term lending of the production cycle. Term of the loan is gradually increased, a part bank resources began to be used for investments in fixed equity securities. In other words, the term "commercial bank" has lost its meaning. He refers to "business" nature of the bank, its dedication to service all types of economic agents regardless of what they do. Profitability ratios indicate the ratio of profit to the cost and in this sense the results characterize the efficiency of the bank, ie, out of its financial resources to complement the analysis of absolute indicators of quality content. General economic meaning of profitability seen in the fact that they characterize profits from each elapsed Bank (equity and debt) tenge. Analysis of various aspects of profitability requires calculation of profitability indicators of active and passive operations of the bank. Active operations are the main source of income of the bank and, on this basis, the profitability of the bank is determined by the efficiency of active operations. To calculate and analyze the profitability of certain types of active operations: credit, investment, foreign exchange and others. Should determine the amount of income received by each group of the same type of active operations and compared with the corresponding amount of expenses incurred on these transactions.
Types of banks Bank is financial statement that focuses on monies (deposits) provides for temporary use in form of loans (loans, grants) mediate in mutual payments and settlements between enterprises, institutions or individuals. Regulates money circulation in country including the issue new money. The Central (issuing) Bank in most countries owned by state, but even if state formally owns its capital (Italy, Switzerland), or partially owns (Belgium - 50%, Japan - 55%) the Central Bank performs functions of a public authority. The Central Bank possesses a monopoly on issuance (emission) of banknotes - main component for regulating money supply. He holds official foreign exchange reserves, conducts public policy, adjusting monetary sector and monetary relations. The Central Bank participates in management of public debt and carries out cash settlement servicing of state budget. Commercial bank perform almost all types of banking operations. Historically functions of commercial banks are accepting deposits on current accounts. Short-term lending to industrial and commercial enterprises, settlements between them. In modern conditions commercial banks were able significantly extend the reception time and savings deposits medium and long term lending to create a system of lending (consumer credit). Investment banks (in UK - equity house, in France - business banks) specializes on emission-constituent operations. On behalf of enterprises about state requiring long-term investments and resorted to issue shares and bonds. Investment banks take definition of size, conditions, period of emission choice type of securities as well as responsibilities for their placement and organization of secondary circulation. Institutions of this type will guarantee purchase issued securities. Buying and selling of their own account or organizing banking syndicates, which provide customers with stock and bond loans. Although share of investment banks in assets of credit system is relatively small. They thanks for their awareness and foundation relations at play in economy the most important role. Savings banks are typically small lending institutions of local importance, which combined into a national Association and usually controlled by state, and often belong to him. Passive operations of savings banks include accepting deposits from public on current and other accounts. Active operations presents consumer and mortgage credit, Bank loans, the purchase of private and public securities. Savings banks issue credit cards. Mortgage banks - institutions that provide long-term loan secured by real estate (land, buildings, structures). Passive operations of these banks are issuing mortgage bonds. A mortgage is a long - term loan issued by mortgage, commercial banks, insurance companies and building societies and other financial institutions under pledge of land buildings industrial and residential purposes. A mortgage loan used mainly in agriculture, residential and other types of construction. This results increased size of productive capital employed.
Commercial bank Commercial banks is the main part of credit system of country, which includes credit institutions, carrying out various banking transactions for its customers on principles of commercial calculation. For this purposes they use not only your own, but also attracted financial capital in the form of deposits, interbank loans and other sources. Moreover, the borrowed funds mostly much higher than the capital requirements for commercial banks. The main objective of commercial banks is prompt receipt of their founders and clients with a wide range of banking services (including loans), the decision of founders using their own Bank group or individual problems. A characteristic feature of commercial banks, which distinguishes them from state-owned banks and credit cooperatives, is that the main purpose of their business is making a profit (this is their “commercial interest” in system of market relations). Commercial banks may open branches and representative offices on territory of its country and abroad. A necessary condition of their discovery is full payment of declared authorized capital of Bank. However, as a branch and a representative office are not legal entities. They are separate divisions of the Bank, acting on behalf of, and act on basis of the positions approved in accordance with the procedure provided by the Charter of Bank. One of the main goals of commercial banks ¾ profit, which is the source of dividend payments to shareholders, funds of banks, the basis of welfare of Bank employees, etc. the Bank's Profit is difference between his gross income and expenses. Gross income of Bank depends primarily on the amount of its credit investments and investments, the interest rate on their loans, the value and structure of assets of the Bank. The main source of income of most commercial banks is interest charged to borrowers for the use of loans. This is because banks are financial intermediaries engaged in redistribution of funds between those, who they were liberated and those who didn't even have a temporary need. Profit is the most important parameter for evaluating the performance of commercial banks. It is used by analysts to determine the ratings of a banks based on their balance sheets. Now neither in RK no abroad while there is no generally accepted method of calculating ratings of commercial banks. So the ratings calculated by different techniques may vary widely, and, therefore, there are different assessments of the activities of banks.
Analysis of profitability of commercial banks of RK Taking the statistical data of three banks in Kazakhstan, we performed calculations on the regression which results showed us that in the Kaspi bank result is greater than 0. 5 it tells us a great connection between assets and profitability in Kaspi Bank, following a decision we had to compare with bonds and as a result we can see that in the Kaspi Bank, both factors have a great impact on the personal capital, but the ATF Bank and Kaz. Kom Bank, we see the opposite. As a result of the relationship between ATF Bank's assets and profitability is greater than 0. 5, that is, in principle, tells us about the great profitability. Following our decision was carried out in comparison with bonds, and the results were slightly lower than the results of decisions assets. The bottom line is that the ATF Bank have assets greater profitability than bonds. And in the end, we consider the third bank Kaz. Kom bank. The results of the relationship between assets and capital are equal to about 0. 8, which is not the greatest form of communication, but, nevertheless, the result of more than 0. 5 which is not a bad indicator. The result of the relationship between capital and bonds is about 0. 7, which also is not the highest score so far, but still the result above the level of 0. 5 is not an indicator of bad communication. Result of the decision is as follows: Kaz. Kommerts largest bank profitability is the relationship between assets and capital than the relationship between capital and bonds. Nevertheless, all these banks are profitable, that we actually found our solution.
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Correlation Here we can trace the influence of bond assets and equity of three banks: Kaspi, ATF and Kaz. Kom. The first bank that we take for consideration, Kaspi Bank. The greatest impact on equity, vertical, have assets with horizontal bonds. And assets and bonds are approximately 0. 99. Both figures are very strong influence on equity Kaspi Bank. Next Bank has given us: ATF. This bank also equity, vertical, have assets in bonds on horizontal. The result of both measures is approximately 0. 90. At ATF Bank, as well as Kaspi Bank, both indicators have a very strong impact on equity. Last bank, which is given to us for consideration: Kaz. Kom. The effects vertical assets and horizontal bonds are approximately 0. 70. in this case, these figures are not as strong an impact on equity, but a positive effect remains stable.
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TREND analysis The results of this analysis show us the changes that have occurred with bank avtives, obligations and own capital of each of the three banks within 3 years. Kaspi Bank: three years actives, obligations and own capital of the bank changed in a positive way. Which is undoubtedly a positive effect on subsequent operations with clients. ATFBank: three years actives, obligations and own capital of the bank, though had some instability jumping up and down in 2014 was able to raise their performance, though not much compared with 2012. For the bank that data are not unimportant in working with clients. Kaz. Kom Bank: three years actives and obligations changed their performance in a positive way, but own capital has dropped significantly in 2014, compared with 2012. This is a big minus for the bank, as customers may no longer use the services of the bank.
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Conclusion Commercial banks - the main link of the credit system of the country, which includes credit institutions which are carrying out a variety of banking transactions for its clients on the basis of commercial calculation. To do this, they use not only their own capital, but also the attraction of financial capital in the form of deposits, interbank loans and other sources. The main functions of commercial banks: mediation of loan payments, securities transactions, promotion of savings in the economy, ie, mediation in the movement of funds from lenders to borrowers and from seller to buyer. Principles of commercial banks: the work within the real attraction of resources, full economic responsibility of the bank for its performance, establishing relationships with customers based on market and indirect forms of economic regulation of the activities of commercial banks.
References: 1 http: //forum. banker. kz/topic/32799 -aokazkommercbank-o-banke/ 2 http: //elib. me/bankovskoe-delo-knigi/pribyilrentabelnost-kommercheskogo-33517. html 3 http: //www. bestreferat. ru/referat-62991. html 4 http: //www. banker. kz/raiting-activs. php
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