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Bank profits are obtained from bank income, sources of bank income, namely:
Interest income
Interest income is obtained from customers (debtors) who borrow funds in the form of credit. The amount of interest income depends on the amount of credit disbursed and the interest rate determined. Each bank has a different interest rate policy that is adjusted to the cost of funds, strategy and competition.
Banks apply different interest rates for various types of credit or customer segments. For individual customers, credit cards and consumption loans without collateral are subject to higher interest rates by banks, while home ownership loans (KPR) or vehicle ownership loans guaranteed by the assets purchased are subject to low interest rates rather than unsecured loans.
Corporate customers who apply for working capital loans or investment loans for productive purposes with guaranteed assets are generally subject to lower interest rates than individual loans. The Bank also charges different interest rates for each debtor in accordance with the credit rating and ability of the debtor to pay.
Fee based income (FBI)
The FBI is the income derived from collecting fees for services provided by the bank. The simplest example of the FBI is the monthly administration fee charged to a savings and debit card account and the annual credit card fee.
In addition to the examples mentioned above, banks also get income from various other services such as L / C issuance, issuance of bank guarantees (BG), fees charged on credit, interbank transfer fees (clearing or real time / RTGS gross payment system). ) ), the cost of transferring foreign exchange (telegraphic transfer), administrative costs for the purchase of top-up or electricity cellular phones, as well as other costs that are sometimes not realized by customers such as the cost of printing ATM receipts.
In principle, banks will try to charge fees for services provided or benefits enjoyed by customers. The Bank will also apply penalties for various customer negligence, including by imposing penalties for late credit card payments or debit card reprint fees and lost passbooks.
Gain from spot and derivative transactions.
The activities of foreign exchange banks with more complex business and operations are not limited to the collection and distribution of funds or the provision of financial services, but also include trading of financial instruments that are permitted according to rules such as bonds (bonds), foreign exchange (foreign exchange), or derivative instruments intended to benefit. This activity is generally carried out by dealers in treasury work units.
The profit from spot and derivative transactions is the profit derived from the trading activities of the financial instruments mentioned above. As an illustration, a forex dealer made a $ 1 million spot purchase transaction of $ 1 million at an exchange rate of 13,500 and closed that position at an exchange rate of 13,700. From the dealer transaction, the bank gets a profit of Rp. 200,000,000.
Dividend
Dividends are bank income derived from the company's dividend deposit, some of which are owned by banks, but the financial statements are not consolidated.
Other income
Other income is bank income which cannot be categorized in the items discussed earlier. Examples of income that fall into this category are income derived from the sale of fixed assets, building leases, or the execution of customer collateral that has been controlled by the bank.