Let's take a look at the deposits line of our example balance sheet in a bit more detail.

You can see here that the deposits are about 433 billion, so it's a substantial number on their balance sheet.

And they also generate interest expense, which will be recorded in the income statement.

And you can see that in the income statement, we have an interest expense of about 73 billion.

Not all of our interest relates to deposits, but there will be a considerable amount of it, which does, let's just take a step back for a second and look at the bigger picture terms of deposit funding in a banking institution.

If we look at a basic bank's balance sheet, so this could be a simple commercial or retail bank rather than a universal bank.

Most banks have a spread business.

And what that means is that we're taking on deposits and making loans and paying out slightly less in terms of interest on the deposits than we are earning as interest on the loans.

And that difference or spread between the interest rates is why this can be referred to as a spread business.

However, you've got to be careful that the loans that you are making don't go bad and that you get enough money back from the loans to give a return to your shareholders, but also to be able to pay back the deposit holders.

So most banks have a pretty advanced and sophisticated risk management process in place to make sure that they do make good loans.

However, the regulators also get involved and regulators say, well, look, we wanna make sure that you have some headroom between the amount that you are lending out versus the deposit funding that you've received.

And that headroom they'll require to be the shareholder's equity.

So the regulators get involved in making sure there's a certain amount of equity capital in every institution.

So in essence, a bank is an intermediary and they're taking money from deposit holders and then lending it out in the form of loans and paying a lower interest rate on deposits and charging a higher interest rate on the loans.

And for most banks, deposits form a really big base of their financing.

If we look at our example bank and have a look at more detail around the breakdown of those deposits, and we can see that the bulk of the deposits are from consumers and the private bank, but there are also some brokered certificates of deposit, some deposit suite programs and deposits from transaction banking customers.

The deposit suite program relates to institutions in the financial markets that will sweep client accounts and put them into federally insured deposit. Institutions like Goldman Sachs notice that the deposits are broken down between savings and demand deposits.

Demand deposits don't have a maturity date, but they do have to be repaid on demand time.

Deposits will be locked in for a specific amount of time.

In other words, the funds cannot be demanded back early by the Deposit.

They'll be with the bank for some time and won't need to be repaid.

This is the maturity profile of time deposits from 2025 onwards, and you can see actually that the majority of the deposits, about 90% of them, are gonna have to be repaid within the 2025 year, and most of the remainder will need to be repaid in 2026.

This provides a pretty good picture of the deposit breakdown on this bank's balance sheet.