Analyzing Bank Financial Statements
Overview
Perhaps more important than the balance sheet, a banks income statement indicates where the bank is making its money, as well as how large its expsenses are that generates that income.
Income and expense on the income statement is often parsed into two types, based on the standard classifcation of bank models.
- Investment Income and Expense
- Other Income and Expense including Service Revenues and Fees
Investment Items
The typical way to view a bank is that it is an institution that makes money from borrowing at one rate and lending at a higher rate. On the oncome statement, the following are the relevant items to help determine how well the bank is achieving that goal.
The difference is the net interest income.