Financial liabilities: analysis, structure. Liabilities are ...

Liabilities are operations that form banking resources. For each commercial institution they are very important. First, the bank's reliability factors are the stability of resources, their structure and magnitude. Secondly, the price of resources affects the volume of profit. Thirdly, the cash base determines the volume of active operations that bring profits to the bank.

Concept of liabilities of a financial institution

What it is? Passive operations play a very important social and national economic role: they collect temporarily free funds of the population and enterprises, which allows satisfying the needs of the economy in working capital and fixed capital, investing money (savings) in investments, and providing loans to the population. Incomes from deposits and debt securities can partially cover the population's losses from inflation.
The liabilities of the bank are: share premium, profit, funds, authorized capital. Other groups are also included here. This - additional and reserve capital, investors' assets, undistributed profits, household deposits.

Liabilities structure

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

The first is the obligations of a financial institution to creditor banks and depositors (so-called passive credit operations). Here everything is clear. According to these operations, the bank acts as a borrower, and clients - as creditors.

The second group includes operations that form their own resources that do not require a return. Here, too, everything is simple. In other words, it's own and borrowed funds.

Analysis of the liabilities of a financial institution

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

Management of financial organizations, audits and internal statistics, as well as accredited government bodies, constantly monitor and analyze the liabilities of banking institutions. The attracted funds and their number determine what percentage of this or that financial organization will occupy in the banking system of the country. In order for it to function normally, this share should not exceed 10-11%.

Analysis of own funds

What is it and why it is conducted? Analysis of own funds can make it difficult for the factor that the banking market is unstable. With the help of regular analysis of the bank's liabilities, it is possible to foresee some risks. And to develop a further program to minimize them.
In the analysis of own funds, the following indicators are evaluated: the dynamics, structure, composition of liabilities, comparison of own funds using gross and net indicators, change in additional and authorized capital. Such a passive analysis 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. On the basis of such data, conclusions are made 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 to make sure of the stability of the enterprise.

Demand deposits in current liabilities of the bank

Current liabilities are cash balances at the end of the business day on customer accounts. These remnants can be different and vary from zero to the maximum values, since the material situation of the population is different and continuously changing. Assuming that all accounts are reset to zero, the current assets of the bank will also go into negative territory . In fact, the risk of this situation is minimal, since the opening and closing of customer deposits is chaotic. Thus, current liabilities are a collection of random and independent values in the total mass of accounts.

Transformation of "short" funds into "long" ones

This happens through the support of the total mass of "short" funds due to the replenishment of retiring resources. As a result, an incompressible balance or volume of current liabilities is created, which the bank needs to maintain throughout its operations. After all, only in this case it can be placed in permanent assets with a regular resource (net-capital). That is why it is so important to continually replenish current accounts and continually increase them.

Attracting current liabilities

If there is an increase in the amount of money in the clients' accounts, then the level of trust to banks increases, and therefore there is an occasion for expanding the types of services provided to citizens. An important role here is played by "off-balance" branches of financial and credit institutions. The introduction of plastic cards and various payment systems into the masses creates good conditions for raising the level of current liabilities.

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

Types of liabilities

Since liabilities are also liabilities of enterprises (financial), they are formed at the expense of loans. In this regard, distinguish between short-term and long-term obligations, depending on the crediting period. How do they differ from each other?
Short-term obligations provide repayment of loan debts in a period of up to one year (for example, bank overdraft, various trade credits).

Long-term can be repaid and for several years (arrears of leasing and various types of loans).

Liabilities in the balance sheet

Liabilities are an integral part of the balance sheet. They reflect all the proceeds of the bank. Current or current liabilities in the balance sheet are reflected above. They can exist within a single production cycle. Here everything is simple. 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 amount is the owner's own capital. This is a very important indicator. The said value may reflect the balance of the owner's capital, if all assets are sold, and the proceeds will go to repay the debts. In other words, if the assets are a kind of property of the company, the financial liabilities are the capital at the expense of which this property was formed.
All assets and liabilities are reflected in the balance sheet of the company. It is compiled for each given (defined) reporting period.