Does it make sense to split a Bank's costs into variable vs fixed? Or is there a better segmentation?
(edited)
Does it make sense to split a Bank's costs into variable vs fixed? Or is there a better segmentation?
(edited)
Hi Anonymous,
fix and variable is a feasible way to divide costs for a bank. You may also use other ways (eg value chain or operational functions), the important thing is that:
Best,
Francesco
Hi! There are many many ways how you can structure costs. You can do it according to business lines (for example interest vs non interest), business processes, functional groups, logical categories (e.g., fixed and variable), or many other. There is no "best" option! You have to just be aware of the fact that there are many possibilities, and that it is your task to find out, which kind of categorization makes most sense given the context and data available. This is done by means of clear communication with the interviewer.
Cheers, Sidi
I would split it into interest and non-interest expense. Makes much more sense... You can also have a look at a 10-k of a bank ;)
Hello!
Yes, makes sense, but I would advise you to look at each cases prompt to see what approach makes most sense.
Hope it helps!
Cheers,
Clara
Hi,
Don't forget to add Cost of Capital, Provisions (cost of risk) and of course the classic FC, VC
Best
You can do so - banks also have variable and fixed costs. What goes into those buckets e.g, fixed = CCAR/Regulatory, Real Estate or Administrative costs is what differentiates it from other industries
Our client is SmartBridge, a nonprofit educational institution offering face-to-face tutoring services. The client operates in the US. The mission of SmartBridge is to help as many students as possible to complete studies and prevent that they drop from the school system, in particular in disadvant ... Open whole case
Problem definition: Our client is Korean Car Parts (KCP), a multi-national original equipment manufacturer (OEM) of car parts based in Korea. They've recently seen a decline in profits and have brought us in to understand how to address this falling profitability. Open whole case
Sky China, a government-backed Chinese airline, has recently seen profits plummet due to COVID-19. Profits are down 80% in the months of February and March, but are showing early signs of a rebound in April. They've brought you in to first investigate what can be done immediatedly to prevent hemor ... Open whole case
Our client is Energy England, one of northern England’s largest electric utility companies. They were created over the past decade through an aggressive series of mergers of existing utility companies each specializing in a single energy generation source. Recently, the CEO has embarked on an initi ... Open whole case
Our client is a BlissOttica, an Eyewear Manufacturer that is looking to reach a 10% increase in profits. How would you help our client? Open whole case