ANALYSIS OF THE EFFICIENCY OF BANKING ACTIVITY IN THE CONDITIONS OF RISK ASSUMPTION

A bank operates on the basis of a program and a plan of measures that it undertakes. In the study of the concrete situation and the forecasting of the situation in the banking and economic system that banks serve, they can identify a series of risks, which, if they quantify them, know them, and take measures to avoid or even diminish them. Under these circumstances, we are talking about assumed risks that the bank takes in strict consistency with the situation at the time of the analysis and prognosis of the evolution of the banking and financial market situation. In analyzing the concrete situation of a bank’s activity, we use a number of statistical indicators that we will generically call bank performance indicators. These indicators reflect how, based on the activity and the assumption of risks, the company managed to carry out a good activity. In the category of these bank performance indicators we include the rate of profitability that is the expression of the profit obtained by the bank in its activity, and here we are talking about financial profitability or economic profitability. Economic profitability reflects the effect of managerial capacity to use financial resources to achieve profit and under the conditions assumed in the development plan and the program of measures. Another indicator having an effect on the appreciation of bank performance is the leverage effect that acts when the assumption of new resources is more advantageous or at least equal to economic profitability, ie an additional expense to prevent or mitigate the risks requires expenditures that compare to the earnings obtained give effect to the effectiveness of those measures. Thus, if spending is much higher than income from risk mitigation measures, it is sometimes preferable to isolate that risk and reduce the activity of the bank in order not to get into a more delicate situation. In the banking field there are a number of other indicators that show the profitability of the bank and which, compared to the risk indicators, give us the effect of the measures taken by the bank.