CASA ratio
CASA ratio = (Current account deposits + Savings account deposits) / Total deposits
Any question on the cost or the stability of a bank's funding. Only current and savings go on top; fixed, recurring and term deposits are in the denominator only.
- Current accounts
- Demand deposits paying 0% interest
- Savings accounts
- Demand deposits paying usually 2% to 4%
Weighted average cost of deposits
Cost = (SUM of each bucket x its rate) / total deposits
Saving from a mix shift = amount shifted x (old rate - new rate)
When a deposit mix and its rates are given. Divide by total deposits, not by the interest-bearing ones, or the zero-cost current accounts will vanish from the answer.
- bucket
- Current, savings or term deposits, each with its own rate
Net interest income from a balance sheet
Interest earned = advances x lending rate + SLR securities x their yield + 0 x CRR cash
Interest paid = CASA x CASA rate + term deposits x term rate
NII = interest earned - interest paid
When a question builds a bank from its deposit mix and reserve requirements. The CRR balance is non-earning, so it appears on the asset side with a yield of zero and still has to be funded.
- advances
- Deposits times (1 - CRR% - SLR%), when the bank lends to its limit