Sources of Revenue: Bank
·
Interest
income on loans and advances and discount income on bills: Banks charge
interest on almost all types of loans and advances, which comprise the largest
source of income. Banks also discount certain types of bills and realize
income.
·
Income
from investment in securities: Banks realize dividend and interest income earned
from its investment portfolio in government securities and capital market
exposure.
·
Income
from deposits in other institutions and money market investment: Banks keep
deposits in Bangladesh Bank and other financial institutions and earn interest
on them. They also have exposure in money market investment, which is a short-term
source of income.
·
Fee
income from miscellaneous services sold: Banks provide miscellaneous
services to the customer and earn a handsome amount every year like as issuing
TT, DD, Pay Order, online fund transfer, account maintenance, payment services
etc.
·
Other
Income: Commission, exchange, and brokerage income, Profit/loss on sale of
investment, profit on exchange transactions, income earned by subsidiaries etc.
Areas of Expense: Bank
·
Interest
paid on deposits: A huge amount of interest has to pay a bank for its
different categories of deposits collected from public or institutions.
·
Interest
paid on other non-deposit borrowings: Interest paid on interbank borrowings,
interests paid on any refinance scheme etc. are included under this head.
·
Other
interest expenses: Sometimes banks are to pay interest on subordinated debt
or such types of debt instruments issued.
·
Operating
& Administrative expenses: For salary and wages, director’s fees and
allowances, rent and establishments, repairs and maintenance, printing &
stationary, insurance and legal charges, auditor’s fees and expenses, advertisement
and publicity, etc. a bank has to pay a huge amount every year.
·
Provision
for loan losses and contingencies: Provisions aside for loan losses,
diminution in the value of investments etc. will be included in this head.
·
Taxes:
Tax on income is a huge area of banks’ expense.
·
Other
miscellaneous expenses: Any other expenses beside mentioned above.
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