Assessment of economic efficiency of bank’s securities operations (on the example of JSC “Oshchadbank”)

Abstract

In stocks and bonds market banks can lend and borrow securities and make profits, maintain liquidity and attract additional financial flows. That is why one needs to assess the economic efficiency of the securities portfolio. The aim of the study is to develop a methodology for evaluating the effectiveness of the bank’s operations with securities. The choice of the bank is conditioned by available information and importance of the banking system. The research methodology is based on the coefficient method. A model allows to combine several indicators into one generalizing coefficient S. Bank’s securities operations can be considered cost-effective if the calculated value of S is higher than the average value of 0,5. The evaluation methodology involves the sequence of steps: 1) determination and analysis of selected indicators; 2) normative relations between growth rates of selected indicators, 3) construction of a matrix of normative and recommended ratios, 4) calculation of actual absolute values and growth rates of selected indicators, 5) construction of a matrix of actual relations between the growth rates of selected indicators, 6) comparison of actual and normative growth rates, 7) calculation of the average value of the generalized indicator, 8) comparison of the actual growth rates of the selected indicators with the generalized result and the average value. The developed model gives the possibility to carry out the comparative analysis of the efficiency between different banks irrespective of size. The approbation of the approach is done for particular example of JSC “Oschadbank” due to the available information. During 2012-2019, the share of the securities portfolio of JSC “Oschadbank” in assets averaged 40%, and its highest value is observed in 2018 (53.90%), and the lowest - in 2012 (12.11%). Efficiency of securities transactions has increased: in 2019, the growth rate was more in line with their regulatory ratio (S2019 = 0.63) than in 2018 (S2018 = 0.38). The investment of JSC “Oschadbank” in securities is considered as a more reliable and alternative source of income and liquidity, as compared to loans.