Cost of Funds
Cost of Liabilities
Credit & DebtThe blended average interest a bank pays across all its deposits and borrowings: current accounts at 0 percent, savings at about 3 percent, fixed deposits at about 6.5 percent, and other funding.
Formula
Cost of Funds (%) = Total Interest Paid / Average Interest-Bearing Liabilities x 100
Why it matters
It is the check on a flattering CASA ratio. A high CASA bought with high savings rates shows up as a higher cost of funds, and only the two together tell you whether the bank's money is genuinely cheap.
Indian example
Related terms
Learn the concept
Bond Pricing and Yields →From the research
What Three Years of a Cash Flow Statement Reveals That One Year Hides
A single year of cash flow is a snapshot. Three years is a story. Learn what the trend reveals about earnings quality, funding, and sustainability.
ValuationComparing Two Companies on ROE, and Why the Higher One Is Not Always Better
Two companies can report the same ROE for very different reasons. DuPont analysis shows why an ROE built on leverage is not the same as one built on quality.
ValuationWhat a High P/E Actually Implies, and When It Is a Trap
A high P/E is not simply 'expensive'. It is the market pricing in expectations. Learn how to read what a P/E implies, and the two traps that catch beginners.