Blance sheet Class

1. Prepare a Balance Sheet for the bank

Assets		Liabilities
Cash and deposits with Central Banks	1851473	Customer deposits	20534265
Development Properties	457896	Due to Banks	1680479
Due from Banks	2337275	Legal and Statutory Reserve	521205
Fixed Assets	209372	Medium term borrowing	4738170
Investment properties	1307187	Other deposits	355087
Investment securities	2374152	Other liabilities	761716
Loans and Advances	24273326
Other Assets	457078
Property development receivables	309886
		Equity
		Minority Interests	626160
		Other Reserve	2602366
		Retained Earnings	323183
		Share capital	1435014
TOTAL	33577645		33577645

      2.   Sample interest rates for various items are given below.  Using these, calculate the banks interest income, interest expense and net income from interest business.

Interest Income	2254717
Interest Expense	1525179
Net Income from Interest Bus.	729537

   

      3 . Calculate the interest margin for the bank based on the sample rates given.

  

Interest Margin

2.17%

4 . If the rate for interest on deposits had been at 7% rather than 6%, what would have been the impact on the figures calculated in 2 and 3 above?

Interest expense will increase and this cause the interest margin by to 1.56%.

5 . Calculate a simple cash ration to customer deposits.

9.02

6. Why is the cash ratio important to a bank and regulated by the Central Bank?

        The central bank wants to involve shareholder to the risk of running the bank

       7. What are the problems associated with not having the correct cash ratio?

 It could result in harming the depositors or it could even cause a run on a bank

  8.Why do Central Banks require Legal and Statutory Reserves?

 To assure that the bank can pay its future claims

Balance Sheet Item	Interest rate
Medium Term Borrowing	5%
Customer Deposits	6%
Loans and Advances	9%
Other Deposits	4%
Due from Banks	3%
Due to Banks	2.50%