Issue: №10/2, 2019
Introduction. Determining the level of the financial condition of the banks is one of the main tasks both the banking supervisory authorities, the banks themselves, and professional financial market participants. It helps to prevent several serious problems and contributes to strengthening the economic security and stability of the banking system. The most convenient way to estimate the financial condition of banks is through the use of index methods. Purpose. The purpose of the article is to summarize the theoretical and methodological bases for analyzing and evaluating the financial condition of a bank in order to effectively manage and predict the activities of a banking institution. Results. The most popular method of assessing the financial stability of a banking institution is V. Kromonov’s index methodology. It is based on the use of seven parameters, such as share capital; equity; commitment on demand; general obligations; liquid assets; working assets; protected capital. Based on these data, six criterion coefficients are calculated; thus it helps determine the financial condition of a bank. In order to calculate the integral stability index, the above-mentioned indicators have to be normalized, multiplied by weighting coefficients, and summarized. The article provides a general assessment of the financial stability of PJSC CB «PrivatBank» during 2014-2018. The results showed that in 2016 the general stability ratio, the capital protection ratio, and the stock capitalization ratio were negative. This was due to the fact that the basis for their calculation is the amount of equity of the bank, which was negative due to the recognition of significant losses. During 2014-2018, the indicators of instantaneous and general liquidity ratios decreased. This is due to the bank’s active retail policy. The value of the integral coefficient of financial stability and reliability of PJSC CB «PrivatBank» showed rather low results; therefore the stability of the bank is considered as doubtful. It was substantiated that this happened due to a significant level of problem loans of the bank, and this fact played a key role in the result of PJSC CB «PrivatBank» estimation according to V. Kromonov's index methodology. Conclusion. The development of domestic banks requires their management to move from spontaneous management to reasonable and balanced management based on optimal and sufficient assessment of a bank. That is why a comprehensive assessment of a bank’s financial condition is relevant, and choosing the most effective methods is an essential tool in the bank’s doing bossiness. References 1. Bilyk O.Y. Research of modern methods and models of rating of commercial banks. Young scientist. 2015. № 2 (6). pp. 941-945. (in Ukrainian). 2. Holovko O.H. Financial stability of the bank: tools of analysis. Scientific bulletin of Uzhhorod national university. Series: International economic relations and the world economy. 2015. № 3. pp. 76-79. (in Ukrainian). 3. Official site of PJSC CB «PrivatBank». URL: privatbank.ua (in Ukrainian). 4. Polova I.M. Innovative approaches to the assessment of the reliability of Ukrainian banks. Effective economics. 2015. № 12. URL: http://www.economy.nayka.com.ua/?op=1&z=4660 (in Ukrainian). 5. Annual reports of PJSC CB «PrivatBank» URL: privatbank.ua/about/finansovaja-otchetnost (in Ukrainian). 6. Faliuta A. Analysis of index methods for assessing the financial conditions of the banks. Economic analysis. 2012. Vol. 10 (3). pp. 103-106. (in Ukrainian).
Keywords : bank, financial stability of a bank, management of financial stability of a bank, coefficient analysis, liquidity, V. Kromonov’s index methodology