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Asset and Liability Management: The Banker’s Guide to Value Creation and Risk Control, Second Edition by Youssef F. Bissada, Jean Dermine

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Profitability of deposits and loans: The need for a relevant fund transfer price

Let us consider the balance sheet introduced in Stage 1.

e-Bank’s balance sheet (31 December 2006) $ million
Assets Liabilities and shareholder’s equity
Reserves with central bank40Demand deposits500
Consumer loans300Term deposits300
Corporate loans200  
Interbank loans300Interbank deposits200
Government bonds230Equity100
Fixed assets30  
    
Total1100Total1100

Deposits and loans are collected by various branches located in several towns. Let us consider the branch located in central Paris. Here is its balance sheet.

Central Paris branch’s balance sheet
Assets ($ million) Liabilities ($ million) 
Consumer loans60Term deposits70
Corporate loans40  
Fixed assets10  
    
Total

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