What is Bank Asset? Definition of Bank Asset, Bank Asset Meaning

The bank asset is the set of integrating elements of the asset within the balance sheet of a bank. It covers those resources with which the entity carries out its business activity.

Within the balance sheet of a bank, the bank asset is the sum of multiple elements that make up the asset of the same.

At the same time, it is assumed that the active configuration is also applicable to other economic organizations such as the savings banks, cooperative credit or similar financial institutions.

The banking asset gathers an extensive list of accounting items, generally specified and regulated by the legislation of each territory in economic and accounting matters.

Among them, there are generally different resources that the entity has, such as property and property rights, and with which it has the ability to obtain profitability.

Bank asset objective

The operation of the asset part in banks is carried out through what are known as asset operations.

The most prominent ones give meaning to the banking business model, being the loan of money and the formation of investment portfolios.

That is, the asset is used to carry out a certain economic activity and obtain profits, as well as the infrastructure for its proper development.

Bank asset elements

The economic regulations a series of elements that are common for all the assets of banking and financial entities, highlighting the following:

  • Profitable part of the asset: It brings together those elements with which the bank directs and gives meaning to its economic activity.

Hence, in this group are the securities portfolio, which the organization owns, as well as other funds invested in other entities or central banks. They are usually referred to as available for sale, and are a frequent source of income for the entity.

Also included here is all the credit and lending work of banks to families and companies as a business model, through multiple forms of financing. They are commonly known as loan investments.

  • Unprofitable part of the asset: It focuses on other elements with which the entity supports the conduct of its business. It would integrate fixed assets, real estate, logistics facilities, as well as equipment such as industrial and technological machinery. It is also important to note that, here, other rights such as industrial and intellectual property are included.
  • Reserve part : This part is made up of all the deposits and assets in custody that the bank treasures as a service provided to its clients. Although it would not be the full part of them, since the banks only have reserves stipulated by law.

Having said the above, it is observed that this classification serves management and valuation reasons, in the sense of the different possibilities of obtaining future economic returns.