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Bank of America Reports Third-Quarter 2023 Financial Results

bank financial statements

As before stated, banks earn interest on deposits that they lend out as loans. The amount of revenue a bank earns is determined by the amount of interest it can charge. Interest expense, the cost of storing customer deposits, will be deducted from interest-related revenue on a bank’s income statement. Banks accept deposits from individuals and corporations and offer interest on selected accounts. In turn, banks accept deposits and either invest in securities or lend to businesses and individuals. The risk is that the borrower may default and not be able to pay the loan back.

  • A profit and loss statement, or income statement, sums up a company’s revenues, expenses and costs incurred over a specific period.
  • The central bank deposits line item shows how much money banks keep in reserve funds.
  • The financial statements are used by investors, market analysts, and creditors to evaluate a company’s financial health and earnings potential.
  • A profit and loss statement is presented in this format to highlight the profitability of a company’s operations before deductions for the financial costs and tax consequences.
  • Below is a portion of ExxonMobil Corporation’s income statement for fiscal year 2021, reported as of Dec. 31, 2021.
  • However, most retail banks are commercial banks that serve both corporate and individual customers.

The cash flow statement will help us understand the inflows and outflows of cash over the time period we’re looking at. One of the main tasks of an analyst is to perform an extensive analysis of financial statements. In this free guide, we will break down the most important types and techniques of financial statement analysis. Financial statements are also read by comparing the results to competitors or other industry participants.

What Can We Learn From Bank Financial Statements?

It is the guidelines that explain how to record transactions, when to recognize revenue, and when expenses must be recognized. International companies may use a similar but different set of rules called International Financial Reporting Standards (IFRS). Investing activities include any sources and uses of cash from a company’s investments in the long-term future of the company. A purchase or sale of an asset, loans made to vendors or received from customers, or any payments related to a merger or acquisition is included in this category. Operating revenue is the revenue earned by selling a company’s products or services.

bank financial statements

Understanding these line items is important in analyzing the performance of a bank and its risk management capabilities. The cash flow statement is different from the income statement and balance sheet because it only records cash activities from operations. It considers movements of cash such as payments of interest, taxes, wages, rents and suppliers. This statement does not include sales made on credit or the future collection of accounts receivable. Alone, the balance sheet doesn’t provide information on trends, which is why you need to examine other financial statements, including income and cash flow statements, to fully comprehend a company’s financial position.


Those wanting to dig a little deeper may want to consider learning how to analyze reports, such as shareholder’s equity and retained earnings. Investors can find a publicly traded company’s financial statements in its annual report or a bank financial statements 10-K filed with the SEC. The financial statements used in investment analysis are the balance sheet, the income statement, and the cash flow statement with additional analysis of a company’s shareholders’ equity and retained earnings.

Standard Digital includes access to a wealth of global news, analysis and expert opinion. Premium Digital includes access to our premier business column, Lex, as well as 15 curated newsletters covering key business themes with original, in-depth reporting. You can also review how much interest you’re earning in your bank account as a percentage and a dollar amount and whether you might want to switch to a higher-earning checking or savings account.

What Is the Difference Between a Bank Statement and a Transaction History?

These transactions also include wages, income tax payments, interest payments, rent, and cash receipts from the sale of a product or service. Investors and financial analysts rely on financial data to analyze the performance of a company and make predictions about the future direction of the company’s stock price. One of the most important resources of reliable and audited financial data is the annual report, which contains the firm’s financial statements. As a result of these factors, it can be difficult to understand the real financial situation of a bank.

Annual reports often incorporate editorial and storytelling in the form of images, infographics, and a letter from the CEO to describe corporate activities, benchmarks, and achievements. They provide investors, shareholders, and employees with greater insight into a company’s mission and goals, compared to individual financial statements. The purpose of a cash flow statement is to provide a detailed picture of what happened to a business’s cash during a specified duration of time, known as the accounting period. It demonstrates an organization’s ability to operate in the short and long term, based on how much cash is flowing into and out of it.

Interest Rate Risk

Together, financial statements communicate how a company is doing over time and against its competitors. Investing activities are any uses of cash for changes in the company’s investments. These include the purchase and sale of assets such as equipment and buildings or long-term securities.

Cash, marketable securities, inventories, and accounts receivable are examples of assets that may be converted to cash in less than a year. To analyze a bank’s financial statements, one must first understand these metrics. We’ve gone over some of the most important metrics to look for when researching a banking firm in this article. The amount a bank earns as revenue depends on how much interest it can charge. Depending on the current economic environment, the interest rate environment can be beneficial or detrimental to a bank’s profits.

CAR protects depositors while also promoting financial system stability and efficiency. Banks accept deposits from people and invest them in securities or lend them money. Before acting on any information in this material, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice.

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