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Banking Management > Lectures > Flashcards

Lectures Flashcards

1
Q

Cost /income ratio

A

(personal expenses + general expenses incl. dep) / operating income

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2
Q

Pre Tax margin

A

Pre tax income/operating income

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3
Q

Compensation revenue ratio

A

Personal exp / operating income

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4
Q

ROA

A

Profit/ Average assets

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5
Q

Net interest margin

A

Net interest income / average assets

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6
Q

Gross margin in bp

A

operating income / average assets under management

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7
Q

EPS

A

profit attributable to shareholder/ average number of shares

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8
Q

ROE

A

Profit/ average equity

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9
Q

Economic profit

A

Adjs. Profit - cost of capital

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10
Q

Rev/cost/headcount growth

A

(V1-V0)/V0

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11
Q

New asset growth

A

net new assets/ Assets under management at time 0

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12
Q

Financial business volume

A

Client assets + credit volume

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13
Q

Market share & league tables

A

Business volume of bank / total volume of market

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14
Q

Different risks

A

Market risk, Credit risk, Loss & Operational risk and Loss absorption capacity

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15
Q

Market Risk measurements

A

Value at Risk, interest risk

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16
Q

Credit risk & Operational risk measurements

A

Risk weighted assets, expected losses, economic capital

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17
Q

Common Equity Tier 1 Ratio

A

Common Equity Tier 1 (CET1) / risk weighted assets

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18
Q

Leverage ratio

A

Equity/assets

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19
Q

P/E

A

Share price / earnings per share

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20
Q

P/B

A

Share price / book equity per share

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21
Q

Shareholder return

A

(P1-P0+D)/P0

22
Q

Client assets

A

All deposits accounts, safekeeping accounts

23
Q

Assets under management (AuM)

A

Client assets with investment purposes

24
Q

Assets under Custody

A

Third party manages the assets

25
Q

Compunded Annual growth rate (CAGR)

A

(Vn/V0)^(1/N) -1

26
Q

3 Valuations for Assets

A

Nominal value
Cash & cash equivalents, due from banks and customers, mortage loans

Fair Value
Trading portfolio, positive replacement values of derivatives

Amortized cost
Reserve repurchase, debt instruments

27
Q

3 Valuations of liabilites

A

Nominal value:
Due to bank, customer deposits

Fari value:
Trading portfolio liabilities

Amortized cost
Repurchase agreement

28
Q

Bank Management Definition

A

Informal and formal steering mechanisms for coordination of various decisions

How to produce relevant information

29
Q

Steering system definition

A

Interacting components forming intergrated whole with purpose

measurement –> comparison –> action –> measurement osv…..

30
Q

Goal of steering systems

A

Goal is to influence behavior and decisions at different levels

31
Q

Steering systems example

A

Center steering & cost accounting

Steering with KPI:s (culutre, profit)

Balanced scorecard

Sale performance measure

32
Q

Why steering systems and not seperate decisions?

A
  • Assurance of quality decisions
  • Raising decision speed
  • More rationality
  • Consistency over goals
33
Q

Challanges facing Banking Management

A
  • Combination of goals (profitability, safety, liquidity)
  • Interaction of centralized and decentralized decision
  • Complexity of services and processes
34
Q

Credit Risk Definition

A

Risk arising of non payment installments due to borrower no being able to pay

35
Q

Is credit risk a big risk?

A

Yes, the biggest risk run by banking institutions
Big part of business (lending and borrowing)

36
Q

4 different parts of credit risks

A

Default risk
Creditworthiness
Issuer/borrower risk
Counterparty risk

37
Q

How can credit risk be measured?

A

Regulatory framewrk - Basel 1
Ratings from agencies
Credit spread

38
Q

Credit default swap

A

a contract between two parties in which one party purchases protection from another party against losses from the default of a borrower for a defined period of time.

39
Q

Market risk definition

A

Losses on adn off balance sheet from movement in market prices

40
Q

DVO1

A

Hur PV ändras med en bp change i interest rate

41
Q

Value at Risk (VaR)

A

Tries to capture unexpected change in value in a functioning market

Worst possible loss in a normal market

42
Q

Operational risk definition

A

Risk, direct or indirect loss from failed internal processes & systems

43
Q

3 issues with operational risks

A

Measurement: hard to measure
Management: how can it be controlled
Mitigation: can you transfer it?

44
Q

How to identify operational risk

A

Common language
Define; people risks, process risks and tech risks osv
Form in-house of experts
Loss data collection

45
Q

3 Methods basel 2 / operational risk

A

BIA= average gross income * 0,15
TSA = average cap requirement
AMA = Advanced measurment approach

46
Q

Basel 1,2 &3 områden

A

Basel 1: Minimum capital requirements

Basel 2: Supervisory review purposes

Basel 3 : Market discipline

47
Q

Goal of Basel 1

A

So that banks have a capital amount to bring stability to industry

48
Q

Basel 2 calculations for market risk

A

Standard approach: DVO1

Internal Model Approach: Var and expected shortfall

49
Q

Basel 2 calculations for credit risk

A

Credit risk = exposure * default prob *(1- recovery rate)

50
Q

Basel 2 calculations for operational risk

A

TSA
BIA
AMA

Banking Management (1 decks)

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