Operating income includes gains from the sale of the organization’s property or assets, proceeds from joint ventures with other companies, and interest income from capital investments. An exception are cases when this income is considered the main activity of the entity.
In banking , operating income for the most part comes from specific operations. For example, interest amounts that are payments for loans or loans to individuals or legal entities, as well as interbank loans. Such income may include funds that the bank charges as a small fee for the procedure for opening or closing an account, its maintenance. Do not forget that credit institutions are engaged in consulting activities, and some of them are quite active in leasing, trust and factoring operations, the profit from which is included in the “operating income” article. In addition, this group includes funds received as payment for services for the state, for example, the placement and sale of government securities and treasury bills, loans to them and others.
In the financial statements operating income is reflected by type during the specified period, as a rule, this period is not more than a quarter. They are collected on the “income” account, and then written off to the bank’s profit. In this account, all operations in the accounting of a credit institution are divided into two large groups: from interest transactions and other operating income. Experts say that according to the share of income from operating activities, one can judge the activity of the bank's position in the market. Thus, the more profit on this type, the more stable the position of the credit institution in the money market.
Domestic banks prefer to classify income and expenses in the income statement by the criterion of interest, other operating, commission, and also unforeseen operations. This classification is considered effective, as it allows specialists to clearly see in which particular area of banking activity improvements are needed, and which improvements do not require and are at a fairly high level.
In order to find the amount of profit from operating activities, it is necessary to subtract the total for the corresponding expenses from the total under the item “operating income”. Such costs include the interest paid by the bank on depositary activities, on sold securities and other assets, the negative difference in the exchange rate, deductions to the credit institution insurance funds against unforeseen expenses or to cover the risk. You can also include the payment of certain taxes and non-tax payments to government agencies, extrabudgetary funds and budgets of all levels.
As a rule, operating income is formed under the influence of external factors, that is, they are characterized by aggregation. External factors of influence include the political and economic situation of the country in the international arena, the competitiveness of a particular bank, the degree to which customer needs are satisfied, and much more. For the effective functioning and achievement of the main goal of any commercial enterprise (and the bank is no exception) - to maximize profits, it is necessary to regularly analyze the item of income and expenses from operating activities. In addition, you should draw up budget estimates and adhere to them throughout the reporting period. The most important factor is the preparation of a quality pricing policy that would suit both parties: the consumer group and the leaders of the credit institution.