Getting a quiz back today. 19 of 26 correct. Not great.
Chapter 10. Not covering all of chapter 10, only the first part. Then skip 11, 12, and 13, and go to chapter 14.
Figuring out how banks make money.
The largest chunk of revenue for a bank comes from interest. 64%-65% of revenue for most banks. This includes interest from both loans and securities.
The remaining revenue comes from trading income and customer fees.
The largest chunk of bank expenses comes from interest expenses. About 31%. Another large chunk is loan loss reserves, liquid assets held to deal with loan defaults. While the reserves themselves are not expenses, replenishing them as they become depleted is. The funds for this replenishment are called loan loss provisions, and account for around 12% of bank expenses.
Return on Assets vs Return on Equity.
ROE will be larger, normally. Ratio of net profit to equity capital. ROA will be smaller; ratio of net profit to assets.
Federal Reserve Bank of NY is the banker for foreign banks. It supervises and regulates the operations of all foreign banks in the U.S.