A banks statement of financial position is a financial report that shows the value of a banks

assets, liabilities, and owner's equity at a specific period of time, usually at the end of an
accounting period, such as a quarter or a year. An asset is anything that can be sold for value. A
liability is an obligation that must eventually be paid, and, hence, it is a claim on assets. The
owner's equity in a bank is often referred to as bank capital, which is what is left when all assets
have been sold and all liabilities have been paid. The relationship of the assets, liabilities, and
owner's equity of a bank is shown by the following equation.
A bank uses liabilities to buy assets, which earns its income. By using liabilities, such as deposits
or borrowings, to finance assets, such as loans to individuals or businesses, or to buy interest
earning securities, the owners of the bank can leverage their bank capital to earn much more than
would otherwise be possible using only the bank's capital.
Assets and liabilities are further distinguished as being either current or long-term. Current
assets are assets expected to be sold or otherwise converted to cash within 1 year; otherwise, the
assets are long-term (noncurrent assets). Current liabilities are expected to be paid within 1
year; otherwise, the liabilities are long-term (noncurrent liabilities). The following is an
example of a banks statement of financial position. A more elaborate example from a named
bank can be seen from the attachment provided.

From the above example we can see the following components present in a banks statement of
financial position. A real life example can be taken from the statement of financial position of
CRDB BANK PLC of Tanzania attached.
Bank Assets and Liabilities
Like all companies, the bank statement of financial position is divided into two parts, assets and
liabilities
Assets
Assets are what a bank owns. In other words, what a bank does with its money.

Loans
These are consumer and business loans that create a stream of income from regular
interest payments.

Securities and Other Investments:

These assets are divided into two categories, the banking book and the trading book.

The banking book includes securities that arent intended to be sold. For example, when
banks dont believe they have profitable lending opportunities with their available funds,
they tend to buy low - risk securities to earn a return on otherwise idle cash.
The trading book contains assets that have to be marked to - market, meaning that
these assets must be valued every day at their market price. This category includes
derivatives used to hedge risk for clients (and sometimes the bank itself) and securities
that banks hold in their capacity as market makers. Market makers are willing to quote a
price to buy or sell a security at any time. This means that banks hold securities on their
balance sheet both to sell to clients on demand and when they buy securities from a
client without a buyer already lined up.
Liabilities

Deposits. These include deposits by customers (current or demand accounts, savings

accounts, fixed deposits, also known as term deposit receipts or certificates of deposit)
and other banks.
Borrowings. These include short- and long-term borrowings from other banks, repurchase
agreements, and federal funds purchased. Repurchase agreements are short-term
arrangements to sell investment securities with an agreement that they will be
repurchased at pre-set prices and in pre-set time frames. Federal funds purchased are
temporary (usually overnight) borrowings of excess funds from other banks.
Debt securities issued. These are generally longer-term borrowings for specific purposes
and include trust preferred issuances and corporate bonds. The debt issuances of larger
banks frequently trade on a regular basis and may be readily purchased and sold through
investment brokers.
Derivatives. See Assets section above for definition. Fair-value fluctuations may cause
derivative instruments to be classified as liabilities.

Deferred taxes. See Assets section above for definition. Deferred tax liabilities
represent temporary differences that are currently taxable.
Accounts payable and accrued expenses. Current liabilities arising out of the routine dayto-day operations of a bank such as bills payable, salaries payable, professional fees
payable, etc.
Pension and retirement liabilities. Depending on the type of employee benefits plans
adopted by a bank, these may represent the actuarial valuation of future benefits payable.

Capital (or Equity)

Common capital (or stock). The par value of common shares issued and outstanding.
Surplus (share premium or additional paid-in capital). Excess over par of common shares
issued and outstanding.
Other equity instruments. Typically, different classes of preference (or preferred) shares.
Other comprehensive income. This includes net income or loss for the current fiscal
period. It also represents an account through which changes in fair values of certain items
(e.g. investment securities that are classified as available-for-sale, derivatives that qualify
for hedge accounting, foreign currency exchange rates, or actuarial valuations for certain
types of deferred compensation plan) are recorded.
Retained earnings. The cumulative amount of net income earned or loss incurred since
the banks inception, adjusted for cash or share dividends paid.
Reserves. Banks in some countries are required to maintain statutory reserves as
mandated by their regulators or central banks.

In terms of differences there exist a few of them between statements of financial position of
banks and those of other companies.
Many of the differences between the assets and liabilities of banks and those of other companies
lie in the ways they are recorded on balance sheets. Bank balance sheet values more generally
approximate fair values and are used by bank management largely to manage interest rate risk.
A bank's balance sheet is different from that of a typical company because, in a banks statement
of financial position, you won't find inventory, accounts receivable, or accounts payable. Instead,
under assets, you'll see mostly loans and investments, and on the liabilities side, you'll see
deposits and borrowings.
Deposits and other borrowed funds form a large portion of the liability side of bank balance
sheets. Other companies generally hold higher balances of accounts payable and long-term
borrowings from banks. Banks compete with each other for customer deposits from individuals
and businesses, and hold very little other interest-bearing debt.
In conclusion, financial statements for banks present a different analytical problem than
statements for manufacturing and service companies. As a result, analysis of a bank's financial
statements requires a distinct approach that recognizes a bank's unique risks.