The bank’s assets include any items, to which the bank has the title. The assets are generated by using the bank’s capital and depositors’ funds, interbank loans, bonds, issued by the bank. The respective banking KPI will increase, whenever the bank carries out any investment or other transactions concerning funds placement, lending provision. 

The profit yield of an item is one one the most important characteristics of an asset. In addition to the yield rates, bank’s assets have a number of other features: maturity, risk exposure (probability for a return of the assets with par value unchanged), and liquidity (convertibility into cash with market value unchanged).

The bank’s assets are divided into liquid and illiquid. 

The liquid assets of a financial institution include cash, demand accounts balances, precious metals, state and private short term securities, deposits with less than 1 month maturity, promissory notes and other bank’s funds.

The illiquid assets do not yield any profits for to a financial institution, however they are needed to perform normal operations. Such assets include facilities, buildings, equipment, etc. Low profitability and lucidity of a bank will result in an increase of capital capital expenditures.

The maturity is one of the most important attributes of assets. According to one of the classifications the assets are divided into demand assets, short-life assets, short-term, medium-term and long-term assets.
A particular share of a bank’s assets relates to its financial claims, including cash, balances at correspondent accounts with other financial institutions, issued loans, investments into debt securities of third-party issuers, as well as leasing-related assets.

The assets and liabilities of a financial institution are usually viewed as a whole. Meanwhile, it is important to identify profits and expenses that relate to each individual portfolio, its volume and structure. Today, the bank’s profitability is impacted by both assets and liabilities that it has.

One of the core objectives in assets and liabilities management is to ensure correspondence between maturities of attracted resources (liabilities) and their placement (assets). 

Both liabilities and assets are divided into “short-term” and “long-term” ones. A certain portion of short-term liabilities may be converted into the long-term assets. However, if this conversion covers too many liabilities, this will result in a decreasing liquidity of the bank.

The effective bank management should seek to develop a reasonable strategy in order to match sources of banking resources at their respective prices (the lower, the better), maturirites and methods for assets generation, which enable to increase the bank’s liquidity level, making its activities profitable.

Alexander ZHELEZNYAK,  
Сhairman of the Board 
of Life Financial Group

Life Financial Group, in which Probusinessbank is the core bank, has taken major efforts to manage and control the credit risks. It has given us a chance to develop lending and improve the indicators in this sector. Today, faced with rather unfavorable market environment, the Group’s banks, having sufficient liquidity, have sustained strong lending levels and actively developed various programs for individuals, small and medium enterprises and corporate sector. We are seeking to build up a unique "ecosystem", bringing together both financial and non-financial services, in order help SME grow their business. The Group’s strategy seeks to drive settlement operations, financial and non-financial services (insurance, consulting, servicing programs for Customers Club), enabling to pass higher value to customers and ensure risk-free proceeds for the bank. The current challenging conditions in the banking sector make it hard to forecast the Group’s results for 2015. However, I am sure that we will work hard to improve the indicators for the respective reporting period. Throughout 2015, the Group’s banks will be seeking to develop various support programs for small and medium business.