Operating income in banking activities

Operating income includes profit from the sale of assets of the organization or its assets, funds received from joint activities with other companies, as well as interest income from investing in capital. Exceptions are cases where this income is considered the main activity of the entity.

In banking , operating income for the most part comes from carrying out specific operations. For example, interest that is a payment for loans or loans to individuals or legal entities, as well as interbank loans. To such incomes can be attributed funds that the bank charges as a small fee for the procedure for opening or closing an account, its management. Do not forget that credit institutions are engaged in advisory activities, and some of them quite actively carry out leasing, trust and factoring operations, the profit of which is included in the item "operating income". In addition, this group can include money received as payment for services for the state, for example, the placement and sale of government securities and treasury notes, the provision of loans to them, and so on.

In the accounting reporting, operating income is reflected by types within the established period, as a rule, this period is no more than a quarter. They collect on the account "income", and then write off on the profit of the bank. In this account, all transactions in the credit institution account are divided into two large groups: from interest transactions and other operating income. Experts argue that the share of income from operating activities can be judged on the activity of the bank's position in the market. Thus, the more profit on this type, the more stable the position of the credit institution in the money market.

Domestic banks prefer to classify the income and expense part in the income statement by the criterion of interest, other operating, commission, and also unforeseen operations. This classification is considered effective, as it allows specialists to clearly see in which area of banking activities improvements are needed, and what improvements are required and are at a sufficiently high level.

In order to find the amount of profit from operating activities, it is necessary to subtract the total for the corresponding expenses from the item "operating income". Such costs include the interest paid by the bank on depository activities, on securities sold and other assets, the negative exchange rate difference, deductions to insurance funds of the credit institution from unforeseen expenses or to cover the risk. It is also possible to include payment of some taxes and non-tax payments to state bodies, off-budget funds and budgets of all levels.

As a rule, operating income is formed under the influence of external factors, that is, they are characterized by aggregation. External factors of influence include the political and economic situation of the country on the international arena, the competitiveness of a particular bank, the degree of satisfaction of the client's needs, and much more. For effective functioning and achievement of the main goal of any commercial enterprise (and the bank is not an exception) - maximizing profits, it is necessary to regularly analyze the income and expenses item from operating activities. In addition, it is necessary to prepare planned estimates and adhere to them throughout the reporting period. The most important factor is the preparation of a quality pricing policy, which would suit both parties: the consumer group and the heads of the credit institution.