Financial Statement
Financial statement is the end result of accounting process which reveals the financial result and the financial condition of the banks as on particular date.
It is a basic and formal annual report through which a bank communicates with its stakeholders.
In short, it is a statement that keeps records of the bank’s financial activities.
Reasons to prepare financial statement
To provide financial information regarding assets and liabilities of a bank for a given period of time
To provide information about the earning capacity of the banks
To provide the reliable information about the changes in resources and obligation arising out of financial transactions
To disclose information about the various accounting policies followed in the process of preparing the financial statement to its various users
To disclose other related information about financial statement to its users
To gain or increase general public trust
To established sound communication between a bank and its stakeholders
To follow the principle of transparency and other rule and regulations
To maintain enough liquidity to meet its short-term liabilities
To attract investors or creditors and customers towards bank
To distribute dividend, bonus and other incentives to its shareholders
To find out how much a bank owes to others and how much others owes to a bank
To manage the affairs of the bank by assessing its financial performance and position
To figure out risk and return on a bank’s investment
To fulfill corporate social responsibility of the bank
Financial statement is important to commercial banks since, it displayed a bank’s financial health or result that helps bank’s management to make appropriate decision at appropriate time and situation.
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