The Financial Industry: The Image Of The Banking Industry

The Industry The image of the banking industry has always been somewhat lackluster and boring to most people. However, the industry is opening up many new developments, such as internet banking. Banks are essential for providing financial information to individuals and businesses and have become the foundation of our economy. Financial institutions transfer risk and provide liquidity. There are two types of banks, regional and major. Regional Banks are smaller financial institutions that focus on one area within a country. For example, the United States has six regions. These banks provide depository and lending services in the regions they serve. Major Banks may maintain local branches, but their main focus involves international transactions and underwriting. Therefore, these types of financial centers are typically found in places like New York.

Banks have many different responsibilities, including deciding how many loans to extend, whom to distribute the loans to, and at what interest rate. The banking industry must know the fine line between lending too much and lending enough to make a profit. The interest rate plays an important role

The Net Interest Margin is equivalent to total earning assets or the average interest margin the bank is receiving by borrowing and lending funds. This trend should show an even or upward trend. A bank’s return on assets (ROA) can be deceiving to some investors because banks are highly leveraged, so a mere 1% ROA actually indicates large profits. In addition, an investor needs to look at a bank’s operating expense. Investors like to see this trend decrease or remain constant as the previous years. There are ways a bank can change its financial health, if needed. Banks have an option of issuing new stock, if possible, or reducing its assets. Smaller banks may need to seek a merger with a stronger bank to increase its