Hypothetical Example of A Bank Balance Sheet and Financial Ratios
An example of fractional-reserve banking, and the calculation of the "reserve ratio" is shown in the balance sheet below:
| Example 2: ANZ National Bank Limited Balance Sheet as at 30 September 2007 | |||
|---|---|---|---|
| ASSETS | NZ$m | LIABILITIES | NZ$m |
| Cash | 201 | Demand Deposits | 25482 |
| Balance with Central Bank | 2809 | Term Deposits and other borrowings | 35231 |
| Other Liquid Assets | 1797 | Due to Other Financial Institutions | 3170 |
| Due from other Financial Institutions | 3563 | Derivative financial instruments | 4924 |
| Trading Securities | 1887 | Payables and other liabilities | 1351 |
| Derivative financial instruments | 4771 | Provisions | 165 |
| Available for sale assets | 48 | Bonds and Notes | 14607 |
| Net loans and advances | 87878 | Related Party Funding | 2775 |
| Shares in controlled entities | 206 | Loan Capital | 2062 |
| Current Tax Assets | 112 | Total Liabilities | 99084 |
| Other assets | 1045 | Share Capital | 5943 |
| Deferred Tax Assets | 11 | Reserves | 83 |
| Premises and Equipment | 232 | Retained profits | 2667 |
| Goodwill and other intangibles | 3297 | Total Equity | 8703 |
| Total Assets | 107787 | Total Liabilities plus Net Worth | 107787 |
In this example the cash reserves held by the bank is NZ$3010m (NZ$201m Cash + NZ$2809m Balance at Central Bank) and the Demand Deposits (liabilities) of the bank are NZ$25482m, for a cash reserve ratio of 11.81%.
Read more about this topic: Criticism Of Fractional Reserve Banking
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