Profitability of deposits and loans: The need for a relevant fund transfer price
Let us consider the balance sheet introduced in Stage 1.
| e-Bank’s balance sheet (31 December 2006) $ million | |||
|---|---|---|---|
| Assets | Liabilities and shareholder’s equity | ||
| Reserves with central bank | 40 | Demand deposits | 500 |
| Consumer loans | 300 | Term deposits | 300 |
| Corporate loans | 200 | ||
| Interbank loans | 300 | Interbank deposits | 200 |
| Government bonds | 230 | Equity | 100 |
| Fixed assets | 30 | ||
| Total | 1100 | Total | 1100 |
Deposits and loans are collected by various branches located in several towns. Let us consider the branch located in central Paris. Here is its balance sheet.
| Central Paris branch’s balance sheet | |||
|---|---|---|---|
| Assets ($ million) | Liabilities ($ million) | ||
| Consumer loans | 60 | Term deposits | 70 |
| Corporate loans | 40 | ||
| Fixed assets | 10 | ||
| Total | |||
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