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

2. 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

3. 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

4. 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

5. 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

6. Izdihar Baharin @ Md Daud
Thank You!
Izdihar Md Daud
Post Graduate Centre
HP: