Bank Income Statement Analysis

Another way to think about it the income statement at the end it.

Bank income statement analysis. Vertical analysis of the income statement shows the revenue or sales number as 100 and all other line items as a percentage of sales. Total interest earned was 57 5 billion in green for the bank from their loans and all. Bank of america s income statement is below from their annual 10k for 2017. Net interest margin is a parameter that is of great interest to a bank stock investor.

Understand a bank s income statement step by step. A bank s income statement contains two general categories. For example in the income statement shown below we have the total dollar amounts and the percentages which make up the vertical analysis. So it essentially tells you how did you get from this balance sheet to this balance sheet.

With this method of analysis of financial statements we will look up and down the income statement hence vertical analysis to see how every line item compares to revenue as a percentage. The income statement will generally look as follows. All the line items in a vertical analysis are compared with another line item on the same statement. Historical analysis of mt bank income statement accounts such as net income of 1 6 b can show how well mt bank performed in making a profits.

This is the second in a series of articles on analyzing bank stocks. The top of the income statement is revenue and the bottom is net income. However revenue is derived differently from that of regular companies. The components of bank financial statements and key ratios used in bank analysis the impact of differing accounting standards and policies e g.

Interest income as discussed prior is the money earned from lending out customer deposits and. Provisioning asset valuation securitization etc on the financial statements. For example you can compare one company s profits to its competitors by examining its gross profit margin operating profit margin and net profit margin. Interest income and non interest income.

Here are the key areas of focus. In the case of an income statement it is revenue net sales. Income statement analysis investors can use income statement analysis to calculate financial ratios that can be used to compare the same company year over year or to compare one company to another.