You can start looking at the refinancing of debt through loans that matured during the year. And also in the profit and loss variables that depend on the market interest rate. Likewise, many companies have loans with variable interest rates, so they will have to provision them. You may take into account that banking balance sheets are a little bit country dependent, so I cannot be more specific...

Go through this link

https://www.bing.com/ck/a?!&&p=f4f7fd862225ed37JmltdHM9MTcwODEyODAwMCZpZ3VpZD0xMzJmMWQ5ZS05NDA4LTY1ZjgtMTIyYS0wZWI1OTUxNTY0YTEmaW5zaWQ9NTIyNA&ptn=3&ver=2&hsh=3&fclid=132f1d9e-9408-65f8-122a-0eb5951564a1&psq=Impact+of+monetary+policy+on+the+banking+balance+sheet+%3f+&u=a1aHR0cHM6Ly93d3cubmJlci5vcmcvcGFwZXJzL3c0ODIx&ntb=

Please check this link.

https://www.weforum.org/agenda/2018/11/central-bank-balance-sheets-and-monetary-policy/

Monetary policy can have significant effects on a bank's balance sheet, influencing various key variables. Here are some key components of a banking balance sheet and how they might be impacted by monetary policy:

Interest Rates:

Impact: Changes in monetary policy often lead to fluctuations in interest rates. Central banks may raise or lower policy interest rates to control inflation or stimulate economic growth.

Balance Sheet Impact: The interest rate environment affects the bank's net interest income (the difference between interest earned on assets and interest paid on liabilities). When interest rates rise, banks generally benefit from higher interest income, but may face increased costs on interest-bearing liabilities.

Assets:

Impact: Monetary policy can influence the demand for loans and affect the overall economic conditions. Lower interest rates may stimulate borrowing and investment, leading to increased loan demand.

Balance Sheet Impact: Banks may experience changes in the composition and size of their loan portfolios. Increased lending can boost interest income but also exposes the bank to credit risk.

Securities Holdings:

Impact: Central banks may engage in open market operations, buying or selling government securities to influence money supply and interest rates.

Balance Sheet Impact: Changes in the value of securities holdings can impact the bank's capital and overall financial position. Changes in interest rates may also lead to mark-to-market adjustments in the value of securities.

Deposits and Liabilities:

Impact: Monetary policy can influence consumer and business spending, affecting the deposit base of banks.

Balance Sheet Impact: Fluctuations in deposits and liabilities can influence the funding costs for banks. A decrease in deposits may lead to a need for alternative funding sources.

Foreign Exchange Rates:

Impact: Monetary policy actions can influence currency exchange rates, especially in an interconnected global economy.

Balance Sheet Impact: Banks with international operations may face currency risk, impacting the valuation of assets and liabilities denominated in different currencies.

Reserve Requirements:

Impact: Central banks may set reserve requirements, affecting the amount of funds banks must hold in reserve.

Balance Sheet Impact: Changes in reserve requirements can influence the liquidity position of a bank and may require adjustments to the composition of assets and liabilities.

Regulatory Capital Requirements:

Impact: Regulatory authorities set capital requirements to ensure the financial stability of banks.

Balance Sheet Impact: Monetary policy indirectly affects a bank's ability to meet regulatory capital requirements through its impact on profitability, asset quality, and risk exposure.

Understanding these variables on a banking balance sheet can provide insights into how monetary policy affects the financial health and performance of banks. Additionally, the specific impact may vary depending on the broader economic conditions, the nature of the bank's activities, and its risk management strategies.

Monetary policy impacts the banking balance sheet primarily through interest rates and liquidity. Changes in interest rates affect the value of banks' assets and liabilities, influencing profitability. Adjustments in liquidity conditions can alter the volume of loans and deposits, affecting the overall balance sheet structure and financial stability of banks.

Monetary policy significantly impacts a bank's balance sheet by influencing interest rates, asset valuations, and liquidity. When interest rates rise, the cost of borrowing increases, potentially reducing loan demand and affecting the bank's interest income. Additionally, changes in policy can alter the value of securities held, impacting capital ratios. Effective monetary policy can enhance liquidity, but if poorly managed, it may lead to increased risks and challenges in maintaining a healthy balance sheet, ultimately influencing a bank's profitability and stability.

Dear Larona Madikane,

Based on my research, I conclude that the monetary policies of central banks, such as the Federal Reserve and the European Central Bank, have a key impact on the finances of commercial banks, affecting their ability to operate in volatile economic conditions. Interest rate changes and quantitative easing (QE) programs have significant consequences for banks' profitability, liquidity and risk levels. Interest rate increases can improve loan income, which translates into an increase in banks' profitability, while rate cuts reduce lending margins, which can reduce profits. Quantitative easing, on the other hand, increases the amount of cash in the banking system, which improves liquidity, but can also lead to higher debt risk. For example, in 2020 in the US, bank deposits increased by 25% as a result of quantitative easing, allowing banks to increase lending. However, rising interest rates can lead to liquidity problems as customers move their funds into higher-yielding investments. Credit risk increases in times of low rates, which can lead to higher-risk lending. The central bank's actions also affect banks' balance sheets, where increased assets as a result of QE can improve capital ratios and lending capacity. As a result, monetary policy plays an important role in the stability and functioning of the banking system, and banks must skillfully adapt to these changes in order to cope with dynamic market conditions.

I have also described many of these above-mentioned aspects in my publications posted on my profile of this Research Gate portal.

I am researching these issues. I have published the results of my research in several publications, including the following chapters in a monograph:

Analysis of the effects of post-2008 anti-crisis mild monetary policy of the Federal Reserve Bank and the European Central Bank

Article Analysis of the effects of post-2008 anti-crisis mild moneta...

Synergy of post-2008 Anti-Crisis Policy of the Mild Monetary Policy of the Federal Reserve Bank and the European Central Bank

Article Synergy of post-2008 Anti-Crisis Policy of the Mild Monetary...

ACTIVATING INTERVENTIONIST MONETARY POLICY OF THE EUROPEAN CENTRAL BANK IN THE CONTEXT OF THE SECURITY OF THE EUROPEAN FINANCIAL SYSTEM

Article ACTIVATING INTERVENTIONIST MONETARY POLICY OF THE EUROPEAN C...

I described the key issues of the impact of the Covid-19 pandemic on the economy and financial markets in my article below:

IMPACT OF THE CORONAVIRUS PANDEMIC (COVID-19) ON FINANCIAL MARKETS AND THE ECONOMY

Article IMPACT OF THE CORONAVIRUS PANDEMIC (COVID-19) ON FINANCIAL M...

I described the key issues of anti-crisis state interventionism in my article below:

Anti-crisis state intervention and created in media images of global financial crisis

Article Anti-crisis state intervention and created in media images o...

I invite you to join me in scientific cooperation on this issue,

Kind regards,

Dariusz Prokopowicz