Banking

Overview

Banking represents a core financial service in a robust economy. As financial intermediaries, banks bring savers and consumers together so that idle funds can be re-deployed into the economy.

As a firm, a bank can be analyzed in the same fashion as any other firm, however, the financial aspects of a bank create additional complexities.

Bank Data

Bank Data : As public companies, data such as financial statements and stock prices are available for banks. However, due to the systemic risk nature of the business, banks are required to submit additional financial reporting requirements, which provides an additional source of data.

Basic Analytics

• Financial Statement Analysis - analysis of a bank's financial statements.
• Performance Measures - common measures used to gauge the performance of banks.
• CAMELS : an analysis performed on banks, usually to determine their credit worthiness.
• Bank Valuation : addresses the issues that are unique to a bank when performing a valuation
• Macroeconomics of Finance and Banking :

Banking Models

Banks can be viewed as the sum of two different businesses, the asset business and the fee business.

• Fee Based Business is the part of the business that makes money by collecting fees. This would include whatever fees are collected on deposits, such as minimum balance fees and overdraft fees, and fees associated with its loan origination and servicing. Risk within the fee based business is generally mananged using the same enterprise risk tools as other firms.
• Asset Based Business is the part of the business that makes money off the spread of its assets income and the interest expense of its liabilities. Banking Risk is primarily concerned with managing the risks of the asset businees.

Additional Topics

• Trading Models : are models that use only the information available to traders to determine which banks to buy or sell.
• US Banking Regulations :
• Payment Systems