Commercial bank financial priorities on the life circle stages

Abstract

The object of this paper is to establish the differences in the values of financial indicators depending on the life cycle stages and to identify the financial priorities for each stage. It has defined the life cycle stages of all operating Ukrainian banks in terms of annual market share growth rate, income growth rate, personnel expenses growth rate. It presents a list of indicators of the bank's financial soundness by its components: resource sustainability, liquidity, business activity, financial performance. Taxonometric indices were calculated for each of these components, with their breakdown into qualitative levels (high, average, low) using the "3σ" rule scaling method. The level of taxonometric indices of the components of the bank's financial soundness were related to their life cycle stages. It established financial priorities at each stage of the banks' life cycle: at the setup stage – intensive search for positions for resource allocation and maintenance of sufficient liquidity of assets; at the stage of extensive growth – improvement of the structure of resources in terms of operating assets growth and their quality maintenance; at the stage of intensive growth – profitability growth; at the stage of maturity – maintenance of the balance between liquidity and profitability; at the stage of decline – increase of business activity. The results of the study can be used in developing banks financial strategies.