1

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

Thank You!Izdihar Baharin @ Md Daud

Post Graduate CentreHP: 006019-5170817

Email: izdi@oum.edu.my