Costs of commercial bank
Category: Concept of the Bank and the Banking System
Costs of a commercial bank can be classified by the nature, form, method of accounting period to which they relate, to influence the tax base, a process constraint.
By the nature of bank expenses are divided into six groups: operational, the costs for the business of the bank, to pay bank staff, taxes, contributions to the special reserves, etc.
By operating expenses include, firstly, the payment of interest for attracting bank resources on the basis of deposit and credit operations, issuance of securities. Secondly, the commission paid by the bank from dealing in securities, foreign exchange, cash and settlement transactions, for cash collection. Third, other operating costs (discount rate on promissory notes, a negative result on revaluation of securities and foreign currency accounts, expense (loss) from the resale of securities, transactions with precious metals, etc.). Thus, operating expenses — are costs directly related to banking operations.
Expenses for the business of the bank includes the amortization of fixed assets and intangible assets, the cost of renting, repairing equipment, stationery, contents of vehicles, purchase of clothing, the operational costs of the buildings, etc. Labor cost of bank staff consist of salaries, bonuses, accrued payroll.
Expenditures on taxes associated with taxes on property, land with the owner of vehicles, road user and other taxes related to the cost of bank transactions (ie, taxes, reflected in the expenditure accounts of the bank).
Particular group of costs are the costs to build reserves to cover possible losses on loans and impairment of securities and to cover possible losses on other active operations, the accounts receivable.
Other expenses of the bank varied in their composition. This advertising costs, travel and representation, for training, to offset the costs for bank employees in connection with the use of their personal vehicles for business purposes, marketing costs, costs of audits, litigation, according to published reports, etc.
The shape of different interest, fees and other noninterest expenses.
Interest expense includes interest paid by the bank for a loan, balances of demand deposits and time deposits, which are open to individuals and legal entities, including banks, interest payments on promissory notes, bonds, deposit and savings certificates.
Banks bear the costs in connection with the payment of commissions for securities transactions and foreign exchange services for cash, payment on collection, for received guarantees, etc.
Other non-interest expenses take the form of a discount rate, the cost of the speculative nature of the market, the revaluation of assets, penalties, fines and penalties, administrative expenses (salaries, training, etc.), household spending.
To account for the costs of the bank’s balance account opening balance sheets of the second order. The basis of allocation put a few signs, including the form of consumption, the type of passive operation, the nature of the flow. Based on the balance sheets of the second order divided into the following groups of expenditures:
interest paid for loans raised;
interest paid to legal entities on borrowed funds;
interest paid on deposits of individuals;
expenses on securities transactions;
spending on operations with foreign currency and other currency values;
administrative expenses;
expenses for banks;
fines and penalties paid;
other expenses.
Within each group, costs are allocated more detailed types, which are accounted for on the analytical accounts (for example, costs by type of creditor, fines for violations of the species, interest expense on the nature of the activities and status of the account holders, etc.).
Over the period to which the costs are allocated expenditure for the current period and deferred expenses. The latter may be associated with accrued but unpaid interest on the loan and deposit transactions, transactions with securities, negative revaluation of assets.
By way of limiting the expenses of the bank are divided into normalizable and Nonnormable. By normalized include advertising expenses, travel, staff training, hospitality, to compensate for costs associated with the use of personal vehicles of employees of the bank. These costs are accounted for entirely on the expense accounts of the bank, but the cost in excess of taxable bank.
The effect on taxable cost of the bank are divided into three groups:
1) costs attributable to the cost of banking services (ie, recorded on expense accounts) and bank-deductible when calculating income tax;
2) costs recorded on expense accounts, but not deductible Bank;
expenses directly attributable to the losses of the bank and not taken into account when calculating the taxable base of the bank.