Chapter 6 - Analysing A Banks Financial Statements Flashcards
1
Q
How do you calculate the loan to deposit ratio
What is a good aim for this ratio
A
Loans and advances to customers / deposits from customers
80-90%. If over 100% then they are lending more than they have given out
2
Q
How do you calculate the leverage ratio
What is the minimum for this ratio according to Basel III
A
Equity / assets
3%
3
Q
What is the accounting entry for a bank loaning to a customer
A
Dr loans and advances to customer s
Cr deposits from customers
Effectively creating an asset
