Operating income in the banking business

Operating income includes profits from the sale of property of the organization or its assets, funds received from joint ventures with other companies, as well as interest income from the investment of capital.Exceptions are cases where the income is considered to be the main activity of the subject.

in banking activities operating income mostly comes from carrying out specific operations.For example, the interest amounts that are payment for granting loans or loans to natural or legal persons, as well as inter-bank loans.To those revenues include funds that the bank will charge a small fee as per the procedure of opening or closing the account, its management.Do not forget that credit institutions are engaged in consulting activities, and some of them quite actively pursuing leasing, factoring and trust operations, profits from which are included in the "operating income."In addition, this group includes cash received as payment for the state, for example, placement and sale of securities of state and treasury bills, providing them with loans and so on.

The financial statements operating income recorded by type within the prescribed period, as a rule, this period is not more than quarter.They're going to run, "income", and then written off to the profit of the bank.On this account all transactions in the account of the credit institution are divided into two large groups: the percentage of the transactions and other operating income.Experts say that the share of income from operating activities can be judged on the activity of the bank's position in the market.Thus, the greater the profits for this type, the more stable position of credit institutions on the money market.

Domestic banks prefer to classify revenues and expenses in the profit and loss account under the criterion of interest, other operating, commissions and contingency operations.This classification is considered to be effective, as it allows specialists to visually see which particular field of banking activities for improvement and perfection of which does not require, and is at a high level.

To find the amount of profit from operating activities, it is necessary from the total under "operating income" take up the relevant costs.To those costs include the interest paid by the bank depository activities implemented by securities and other assets, the negative effects of currency, payments to the insurance funds of the credit institution against unexpected expenses or to cover the risk.You can also include some taxes and non-tax payments to the state bodies, non-budgetary funds and budgets of all levels.

As a rule, operating income generated under the influence of external factors, that is, they are characterized by aggregation.The external factors include the impact of the political and economic situation of the country in the international arena, the competitiveness of a particular bank, the degree of customer satisfaction and more.To function effectively, and achieve the main goal of any commercial enterprise (and the bank is no exception) - maximization of profit, necessary to regularly review the income and expenses from operations.Furthermore, it should be planned budget and stick to them throughout the reporting period.The most important factor considered compiling qualitative pricing policy that would suit both sides: and consumer groups, and leaders of the credit institution.