Management objective
The principial reason banks art chartered by state and federal authorities is to make loans to their customers. Banks are expected to support their local communities with an adequate supply of credit for all legitimate business and consumer activities and to price that credit reasonably in line with competitively determined interest rates. Indeed, making loans is the principal economic function of banks - to fund consumption and investment spending by businesses, individuals, and units of government. How well a bank performs its lending function has a great deal to do with the economic health of its region because bank loans support the growth of new businesses and jobs within the bank’s trade territory and promote its economic vitality.
For most banks, loans account for half or more of their total assets and about two- thirds of their revenues. Moreover, risk in banking tends to be concentrated in the loan portfolio. When a bank gets into serious financial trouble, its problems usually spring from __niflcant amounts of loans that have become uncollectible due to mismanagement, illegal manipulation of loans, misguided lending policies, or from an unexpected economic lownturn.
Types of loans made by banks
What types of loans do banks make? The answer, of course, is that banks make a wide variety of loans to a wide variety of customers for many different purposes - from purchasing automobiles and buying new furniture, taking dream vacations, or pursuing college educations to the construction of homes, shopping centers, and office buildings. Fortunately, we can bring some order to the diversity of bank lending by grouping bank loans according to their purpose - what the customer plans to do with the proceeds of his or her bank loans. At least once each year the Federal Reserve System and Comptroller of the Currency require each bank to report the composition of its loan portfolio by purpose of loan on a report form know as Schedule A, attached to its balance sheet.
Bank loans may be divided into seven broad categories of loans, delineated by their purposes:
1. Real estate loans, which are secured by real property - land, buildings, and other structures - and include short-term loans for the construction of buildings and land development and longer term loans to finance the purchase of farmland, family homes, apartments and other multyfamily structures, commercial (nonfarm and nonresidential) structures, and foreign properties.
2. Financial institutions loans, which include both long - and short-term credit to banks, insurance companies, finance companies, and other financial institutions to help them meet their obligations to customers and to expand their services and operations.
3. Agricultural loans, extended to farm and ranch operations to assist in planting and harvesting crops and to support the feeding and care of livestock.
4. Commercial and industrial loans, granted to businesses to cover such expenses as purchasing inventories, paying taxes, meeting payrolls, and to cover other operating costs.
5. Loans to individuals, which include credit to finance the purchase of automobiles, mobile homes, home appliances, and other retail goods and loans to repair and modernize homes, cover the cost of vacations, medical care, and other personal expenses, either extended directly to individuals or indirectly through the purchase of consumer installment paper from retail dealers.
6. Miscellaneous loans, which include all those loans not classified above, including securities loans made to brokers, dealers, and other investors desiring to purchase stocks, bonds, and other securities.
7. Lease financing receivables, where the bank buys equipment or vehicles and leases them to its customers.
Of the loan categories shown, the largest in dollar volume is real estate loans, accounting for nearly one-third of total bank loans. These loans are made to both individuals and businesses in order to construct and purchase homes, apartments, office buildings, retail shops, and industrial structures. The next largest category is commercia and industrial loans (C&I), also representing close to one -third of the total. These loans include credit to purchase inventories of goods and raw materials, to cover operating expenses, and to finance new equipment. Next in importance are loans to individuals and families for living costs, medical expenses, automobile purchase, home appliances, vacations, education and so on.
Words
1. lending кредитование, ссуда, заем
2. to character фрахтовать, брать в наем по чартеру, сдать в наем, преимущественное право
3. loan заем, ссуда, кредит
4. customer клиент, покупательная задолженность
5. community общность, сообщество, объединение
6. adequate адекватный, компетентный
7. supply снабжение, поставка, запасы, сырье
8. legitimate законный
9. rate ставка, такса, курс, оценка
10. со fund consumption ассигновать, финансировать, потребление, расход, затраты, фонд потребления
11. investment spending капитальные расходы
12. units of government единица (правительственный отдел)
13. vitality жизнедеятельность, жизнеспособность
14. to account for открывать счет для
15. revenue выручка, валовый доход
16. to spring from появляться
17. uncollectible неспособные к инкассации
18. downturn экономический спад
19. diversity разнохарактерность, диверсифицированность
20. proceeds поступление, выручка, доход, сумма выплачиваемая при учете векселя
21. to secure обеспечивать, гарантировать
22. short-term loan краткосрочный заем
23. harvesting crop урожай
24. feeding кормление
25. livestock живой инвентарь, домашний скот
26. inventiry опись, инвентаризация, инвентарная ведомость
27. payroll платежная ведомость, общая сумма заработной платы
28. mobile home подвижный, передвижной дом
29. home appliances поступления (внутренние), (обратные, естественные)
30. retail goods розничные товары
31. repair ремонт
32. expenses расходы, издержки, затраты
33. consumer installment потребительский взнос, платеж, партия
34. dealer дилер, торговец, посредник, биржевой торговец
35. miscellaneous разнообразный
36. stock запасы, ассортимент, акция
37. bond облигация
38. security охрана, защита, обеспечение, гарантия
39. lease аренда
40. receivables дебиторская задолженность, счета дебиторов
from customers задолженность клиентуры
receivables подлежащий получению
Answer the questions
1. What is the principal economic function of banks?
2. What types of loans do banks make?
3. Which loans are real estate loans?
4. What sorts of credits do financial institutions loans include?
5. What operations are agricultural loans used for?
6. Which expenses do commercial and industrial loans cover?
7. Which credits do loans to individuals finance?
8. What loans do miscellaneous include?
Translate into English
1.Основная причина, по которой государством выделяется лицензия банкам при их открытии – это то, что они выдают ссуды клиентам. 2. Банки снабжают кредитом местные объединения для осуществления юридически законного бизнеса под определенные проценты. 3. Ссуды, представляемые банком, способствуют росту и оздоровлению бизнеса. 4. Финансовые затруднения банков возникают из-за неправильного руководства или незаконных манипуляций. 5. Ссуды выдаются для разнообразных целей: покупки мебели, строительства дома, открытия торговых центров и т.д. 6. Банковские ссуды делятся на семь категорий: займы, для покупки недвижимости, ссуды финансовым учреждениям, на сельское хозяйство, на торговые и промышленные цели, займы отдельным лицам, разнообразные займы, ссуды на получение аренды.