Bank’s Liability Management MCF 304: Bank Management Lecture 2.3 Bank’s Liability Management

Liability Management Involves acquiring funds from depositors and other fund providers in the financial market, and determining the suitable mix of funds for the bank after taking into account the cost of various sources of funds and their expected rates of return Specifically manage bank’s borrowing activities in the financial markets in order to get bank’s liquidity

Deposits Current Accounts Savings Accounts Fixed Deposits Accounts REPO Negotiable Certificates of Deposits (NCD’s) Short term NCD’s Long term NCD’s Floating Rate NCD’s

How to Attract Customers? Competitive interest rates Bank’s size Customer waiting area Number’s of ATM Car park facility Quality of bank staff Customer service Product uniqueness Policies which are harmonious with customers Location Branding

Economic Level It is easier to procure deposits from customers during economic expansion rather than contraction During recession, banks will have to raise interest rates in order to attract deposits Earnings Per Share

Izdihar Baharin @ Md Daud Thank You! Izdihar Baharin @ Md Daud Post Graduate Centre HP: 006019-5170817 Email: izdi@oum.edu.my