The key costs on a bank's income statement include:
- Interest paid on deposits and other borrowings.
Provision for loan losses
- Estimate of the quality of a bank's loan portfolios in terms of the quantum and likelihood of loan repayment on a timely basis. It works in a similar fashion to provision for doubtful debts for trade receivables.
Selling, General & Other Administrative Expenses and Other Operating Expenses
- Include staff expenses (wages, bonuses and other benefits), rental expense (occupancy of head office and branch offices) occupancy and depreciation on PCs and other IT systems.