Banking MBA-1 Basic Course: Spring Semester (part II) 2014
Part I: Banks Structure, Role and Functions Basic Banks - Role and Functions (Rose, Chapter 1) Financial Intermediation, Banking Services
Classification of Banks Money center banks, Commercial banks, Deposit Money banks, Merchant / Investment banks, Specialized banks vs Universal banks, Islamic banks Banks Organisation and Structure (Rose, Chapter 3)
Basic Concepts Money, theoretical, applied Money supply components, Pakistan I nterest Rate; in theoretical realm, in applied realm Interest Rate Structure Pakistan, KIBOR, lending and deposit rates Impact on Banking Assets Pricing and Value, PV, FV, Yield, Return
Part II: Banks Financial Statements, Basic (Rose, Chapter 4) Basic Concepts, Ratios follow check List and clarify Generic Bank Balance Sheet and I ncome Statement Types of Accounts, Book Value Accounting, Pakistan Financial Statements of Selected Bank
Balance Sheet, Report of Condition Assets Loans /advances, gross; Provisions; Net Loans Investments, govt securities; Cash Due, Others Balance Sheet Liabilities and Stockholders Equity Deposits; Time, Savings, Money Market A/C Acceptances, Other Liabilities Surplus /Owners Capital, Common / Preferred Stocks Retained Earnings I ncome Statement, Report of Income
Banking Basic, 2014 2 Interest Income on Loans, Securities Interest Expense on Deposits, Borrowings Non-interest Income / Expense Provisions for: Taxes, Net Income after Taxes, Loan Losses
Part III: Banks Performance Evaluation; Objectives, Techniques Objectives: I ntroductory Maximizing Corporate Value Stock Prices Ensuring Profitability Earnings and Dividends
Techniques; Benchmarks, Ratios (Rose, Chapter 5, pp 150-163) (Do the Drill, thoroughly) Earnings and Profitability Analysis, Ratios / ROA, ROE Efficiency Analysis, Ratios Overlaps with profitability indicators Costs of (banking) intermediation; Overheads, Operating costs Banking Spreads, Margins Interest rate spreads, Net interest margin - Revisited Liquidity and Reserves Ratios in practice or prudential ratios Current ratio, quick ratio acid test ratio, working capital ratio Capital Adequacy (Leverage) Ratios (Rose, p 488)
Part IV: Banking Business Funding a Bank, Basics
Deposits Banks and Deposit Mobilization Deposit structure - generic, Pakistani banks Classification, instrument types, maturity (SBP, SaF write-up) Deposit Pricing theory vs practice (Rose, Chapter 13) Criteria of Pricing cost-plus, average / marginal costs Deposit Rate Structure: generic, Pakistan Bank Borrowings (Rose, Chapter 15) Strategic Purposes, Practices, Trade-offs Short-term, Liquidity; Log-term, Business expansion Access to funds markets, debt markets Instruments, Maturities, Risks Borrowing Costs, Exposure, Risks; choices and alternatives Overall Costs of Bank Funds (Rose, pp 468)
Part V: Banking Business Lending, Basic / Advanced
Banking Basic, 2014 3 Loan types, classification by origin and source, by terms and conditions, maturity, by type of borrower, by sector, by type of use Main line lending business System of Overdrafts vs Term lending, trade financing I nternal Rules and Procedures, (Rose, Chapter 17) Documentation, Verification, Due Diligence Loan Agreement, Terms, Repayments, Recourse Creditworthiness; the Cs, Credit Analysis (Rose, pp 528-532) Borrower Information, Analysis, Evaluation Borrower Analysis, (Rose, Chapter 18, pp 558-579) Financial Ratio Analysis of the Borrower Secured Lending: Collateralized types of Collateral, Evaluation Unsecured lending personal loans, credit cards Bank Lending Policies, Practices A primer Lending Policies Articulation, Implementation Borrower ClassificationClient Categories, Targets Lending Limits and authority levels Exposure limits, Borrowers, Sectors Loan Approval processes, Pricing standards Banking Risks I ntroductory (Rose, Chap5 , pp165-171) Banking Risks Revisited (Rose, Chap16, pp477-478) Banking Credit Pakistani banks, a primer
Part V: Bank Business - Lending Basic / Advanced Lending to Corporations, Businesses, (Rose, Chap 15) Types of Business Loans Stand alone credit facility vs line of credit Short- term Loans: working capital, trade financing Long-term Loans: Revolving Credit, Project Credit, Term Lending, Acquisitions Pricing Business Loans (Rose Chapter 19) Real Estate Lending, Personal / Consumer Lending
Part VI: Banking Business: Investment, I ntroductory Banking I nvestment Portfolios (Rose, Chapter 11) Banks as Investors: Strategies, Objectives Banks Investment Portfolio: Investment Risks (Rose, pp 319-331) Investment Portfolio: Risk/Return and Maturity Profiles Money Market: T-bills, Bankers Acceptances, other securities Capital Market Instruments Bonds, Stocks, Securitized Instruments