FUNDS TRANSFER PRICING A CONTEMPORARY CONCEPT FOR DETERMINING PROFITABILITY OF THE BANK’S BUSINESS SECTORS

Original scientific paper
Autor: Aleksandra Biorac MSc

Summary: In the bank’s profit and loss statement, net interest income accounts for 60% to 80% of the total received revenues. Based on this fact, the paper that follows wishes to examine the essence and manner of functioning of this new accounting technique that allows for a higher analytic performance by breaking-down of the net interest income by the profit centres of a bank. Funds transfer pricing is a quantitative accounting technique designed for banks to measure and evaluate net interest margins (spreads) for credits, deposits, business lines, clients, market segments, or performance of staff employed in the profit centres of a bank.

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