risk management in banking 1. risk? risk uncertainty loss
TRANSCRIPT
www.bseducation.net 1
Risk Management in Banking
www.bseducation.net 2
Risk?
RiskUncertainty
Loss
www.bseducation.net 3
Finacial Statements of a Bank
• 1. Balace Sheet
• 2. Statement of Income
• 3. Cash Flow Statement
• 4.Retained Rearnings Statement
• (as of 31.12.2014)
• ( for the year ending 31.12.2014)
• ( for the year ending 31.12.2014)
• ( for the year ending 31.12.2014)
www.bseducation.net 4
Balance Sheet of a Bank
www.bseducation.net 5
Interest Earning AssetsInterest Bearing Liabilities
www.bseducation.net 6
Share Holders Equity
• 1. Share Capital• 2. Retained Earnings• 3. Revaluation Surplus• 4. Emission Premium• 5. Legal Reserves• 6. Net Income for the year
www.bseducation.net 7
www.bseducation.net 8
Income Statement
www.bseducation.net 9
NonInterestIncome
www.bseducation.net 10
B/S & I/S Relationship
ALM [email protected] 11
Balance Sheet Income StatementAssets Liabilities
Loans
Treasury Bills
Interest Income
Interest Expences
Net Interest Income
Deposits
BorrowingsInterest Earning Assests
Interest Bearing
Liabilities
Non-Interest Earning Assests
Non-Interest Bearing
Liabilities
Share HoldShare ers’ Equity
Total Assets Total Liabilities+SHEQ=
Share Holders Equity
www.bseducation.net 12
Sources of Banking Risks
www.bseducation.net 13
On Balance Sheet Risks
www.bseducation.net 14
OffBalance SheetRisks
Major Off Balance Sheet Risks of Turkish Banks
• Letter of Guarantees (Teminat Mektupları)• Letter of Credits (Akreditifler)• Guarantees Given for Foreign
Transactions (Harici Garantiler)• Cross Currency Swaps (Opsiyonlar-
Currency Opsiyonları)• Forward Transactions (Forward İşlemler)• Interest Rate Swaps (Faiz Swapları)
www.bseducation.net 16
CAMELS O
www.bseducation.net 17
www.bseducation.net 18
www.bseducation.net 19
1.1 unexpected withdrawal of deposits before maturity date1.2 unexpected non renewal of deposits at maturity date2.1 unexpected non payment of loan principle or interest amounts at due dates2.2 unexpected early payment of loans before maturity date3. Unexpected indemnification of Contingent Liabilities & Commitments like Letter of Gurantes or Letter of Credits
www.bseducation.net 20
Market Risks
www.bseducation.net 21
Interest Risks
www.bseducation.net 22
Position Risks in Banks
Operations Risks
Internal FraudExternal FraudPractices: - Employment - Client - Products - Business
Damage to AssetsBusiness DisruptionSystem Failures
ExecutionDelivery
ProcessManagement
www.bseducation.net 24
Operating Risks for non financial institutions
www.bseducation.net 25
BANKING RISKS BECOMING COMPLEX