Scenario 2 One of the major functions of the bank is asset transformation. Based on the...

Scenario 2

One of the major functions of the bank is asset transformation. Based on the deposits received and paid-in capital, the bank should manage the lending process to its customers and maintain the statutory reserve requirement imposed by the Central Bank of Oman. The profits of the bank is depending on the interest rate margin as a difference between interest paid on deposits (expenses) and interest income charged on loans (Income).

Task 1

Explain the bank balance sheet (statement of financial position) by differentiating the bank assets and liabilities? Your explanation should be included trading book and banking book of assets with examples?

Task 2

You are required to make use of the following information of ANZ Bank for the year ended 31^st December 2019 to calculate.

a) Net interest income

b) Profit before interest and taxes

Assets (OMR in millions)	Amount	Annual Return	Liabilities (OMR in millions)	Amount	Annual Cost
Cash	45	0%	Short term deposits	120	2%
Government Bonds	180	1.25%	Medium-term deposits	265	2.25%
Loans to local government	220	3.5%	Long term deposits	385	2.75%
Loans to SMEs	245	5%	Short term financing	275	3%
Loans to corporates	585	6.25%	Long term bonds	150	4.5%
Totals	1,275

The fee income for the year ended 31^st December 2019 is OMR 6.25 million.
Total overhead expenses for the year ended 31^st December 2019 is OMR 23.5 million.

Solutions

Expert Solution

ekkarill92 answered 1 year ago

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