IGCSE, A Level Business Student Forum

Q15 Analyse the possible objectives of banks towards a business. [6]

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Possible Structure
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[KN] Profitability
[AN] Banks aim to generate profits by lending money to businesses.
[AN+] They charge interest rates and fees on loans, which constitute a significant portion of their income.

[KN] Risk management
[AN] Banks assess and manage the risks associated with lending to businesses.
[AN+] They evaluate a company's creditworthiness, financial stability, and business plans to minimize the risk of default.

[KN] Building Long-Term Relationships
[AN] Banks frequently work to build enduring connections with companies. With a variety of services including business accounts, credit lines, and investment opportunities, they want to be a reliable financial partner.
[AN+] Long-term connections can boost the bank's revenue and provide the company more stability.

[KN] Profit Generation
[AN] Making a profit is one of the main goals banks have when working with businesses.
[AN+] Profit generation ensures the sustainability and growth of the banking institution.

[KN]to have long term relationships with the business
[AN]this involves providing good financial solutions and demonstrating reliability in their services
[AN+]establishing strong relationships can lead to repeat business and referrals.

[KN]Risk Management and Financial Stability
[AN]They assess the creditworthiness of businesses before extending loans or credit lines
[AN+]Additionally, banks may offer risk management services, such as hedging options, to help businesses mitigate financial risks.

[kn] provide quality services [an] the bank would need to provide them with proper services [an+] this can improve brand loyalty as the firm will stick to that bank

[kn] profit generation [an] banks can give loans to firms and charge them with interest to gain revenue [an+] since banks need load it can greatly help the bank to gain profits

[KN] financial services
[AN] banks provide range to services to the business for example loans, payments by different suppliers or customers
[AN+] this improves brand loyalty as firm will stick to the bank who is providing them with quality services

[KN] Profitability
[AN] banks main aim to make profits by charging interest on loans.
[AN+] thus banks remain in profits as bank need also to continue their operations

[KN] interest which is profit for the business
[AN] banks aims to gain profit from them which means by providing them with loans and charging interest on it
[AN+] the banks will only support a business gain interest from them

[KN] providing high quality services
[AN] banks aim so to provide quality service as the business is there customer
[AN+] so they are trying to increase customer loyalty

[KN] Provision of credit.
[AN] Helping businesses from finance side to tackle with things like working capital needs or finance needed for or after expansion etc can be an aim of banks.
[AN+] Thus this will help them catch a big fish from which bank can benefit in the future by charging maybe a high interest rate etc.

[KN] Providing best quality services to businesses.
[AN] This will encourage businesses to place their money in the that specific bank due to a feeling of trust which will increase the brand image of banks.
[AN+] Thus this will spread positive word of mouth which may end up encouraging other business to operate with the bank too.

[kn] generating revenue through provision of loans
[an] an aim of banks would be to provide help to businesses so they can go through day-to-day expenses and complete working capital needs
[an+] through such helps if business is able to succeed in will benefit the bank as they can charge a higher interest rate
[kn] providing best quality services and support
[an] such help will encourage business to stay loyal and place their money in such a bank due to feeling of trusts
[an+] this would improve brand image of the bank and help spread a good word which will improv its reputation

[KN]Interest on bank loans
[AN]When banks lend loans they charge a percentage interest on it which allows banks to earn revenue and maximize profits

[KN]Increase bank deposits through business growth
[AN]When a business opens their account in a bank also its employees may have their accounts in the same bank this leads to more deposits eg salary transfers, incomes through cheque/card payments by customers
[AN]Thus banks will have stable sources of funds to lend and pay interests to savers

[KN] generating revenues through the provision of loans
[AN] as the interest charged will be profit for the bank
[AN+] bank will be able to expand

[KN] increased bank deposits through business growth
[AN] When a business opens its account in a bank, it will deposit salaries, etc through that specific bank
[AN+] The bank will now have balanced funds to carry out their tasks

[kn] revenue
[an] earning revenue through granting of loans at interests
[an+] growth for banks and profit

[kn] higher deposits into banks
[an] as a result of business progress, banks get more money deposited
[an+] banks can proceed with their plans conveniently