Balance Sheet

This Page's Content Was Last Updated: March 6, 2025
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What You Should Know

  • A balance sheet follows the fundamental equation: Assets = Liabilities + Shareholders' Equity, providing a snapshot of what a company owns, owes, and shareholders' investment at a specific time.
  • Bank balance sheets differ significantly from traditional corporate ones because banks primarily hold financial assets (loans, securities) and have deposits as major liabilities, while traditional companies have more physical assets and simpler liability structures.
  • Banks must maintain specific capital ratios and are subject to stricter regulatory oversight compared to traditional companies due to their crucial role in the financial system and higher leverage ratios.

What Is a Balance Sheet?

A balance sheet is a financial statement that provides a snapshot of what a company owns (assets) and owes (liabilities), as well as shareholders' investment in the company (shareholders' equity) at a specific point in time.

The fundamental accounting equation that a balance sheet follows is:

Assets = Liabilities + Shareholders' Equity

Key Components of Balance Sheet
AssetsLiabilitiesShareholders' Equity
Current Assets (cash, inventory, accounts receivable)Current Liabilities (short-term debt, accounts payable)Share capital
Non-current Assets (property, equipment, intangible assets)Non-current Liabilities (long-term debt, bonds)Retained earnings and other equity components

Balance Sheet Utility

The balance sheet helps stakeholders:

  • Assess the company's financial health,
  • Evaluate liquidity,
  • Determine how the company finances its assets,
  • Track the company's financial position over time.

Bank Balance Sheets vs. Other Corporate Balance Sheets

Bank balance sheets differ significantly from traditional corporate balance sheets in several key ways:

1. Asset Structure

Banks:

  • Primarily financial assets (loans, securities)
  • A very small proportion of physical assets
  • Large cash/liquid asset holdings for regulatory requirements

Traditional Companies:

  • Significant physical assets (equipment, inventory)
  • A lower proportion of financial assets
  • Less liquid assets overall

2. Liability Structure

Banks:

  • Deposits are the bank’s major liability
  • Higher leverage ratios
  • Complex financial instruments (derivatives)
  • Subject to regulatory capital requirements

Traditional Companies:

  • Accounts payable and term debt as main liabilities
  • Lower leverage typically
  • Simpler liability structure

Total Loans and Acceptances for Canada's domestic systematically important banks (D_SIBs) in $millions

We've compiled key performance metrics for 50+ Canadian financial institutions over 10 to 25 years.
Click here to purchase the data.
Bank...Q2 2021Q3 2021Q4 2021Q1 2022Q2 2022Q3 2022Q4 2022Q1 2023Q2 2023Q3 2023Q4 2023Q1 2024Q2 2024Q3 2024Q4 2024
RBC
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
874,468
875,109
969,599
972,472
981,415
TD
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
921,073
925,327
940,058
946,314
957,873
BMO
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
668,583
652,932
664,658
677,995
682,731
Scotiabank
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
757,283
750,220
760,033
765,793
767,365
National Bank
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
226,067
230,872
235,518
240,418
243,982
CIBC
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
540,153
539,295
543,897
550,149
558,292

Source: WOWA Data Labs

3. Balance Sheet Size

Banks:

  • Much larger relative to equity
  • More leveraged

Traditional Companies:

  • Smaller relative to equity
  • Lower leverage ratios

4. Risk Profile

Banks:

  • Credit risk from loans
  • Interest rate risk
  • Liquidity risk
  • Subject to strict regulatory oversight

Traditional Companies:

  • Operational risk
  • Market risk
  • Less regulatory oversight of balance sheet

5. Capital Requirements

Banks:

  • Must maintain specific capital ratios
  • Regulatory reserves required
  • Stress testing requirements

Traditional Companies:

  • No formal capital requirements
  • Capital structure based on business needs

Total Deposits for Canada's domestic systematically important banks (D_SIBs) in $millions

We've compiled key performance metrics for 50+ Canadian financial institutions over 10 to 25 years.
Click here to purchase the data.
Bank...Q2 2021Q3 2021Q4 2021Q1 2022Q2 2022Q3 2022Q4 2022Q1 2023Q2 2023Q3 2023Q4 2023Q1 2024Q2 2024Q3 2024Q4 2024
RBC
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
3,061,402
3,035,165
3,083,371
1,361,265
1,409,531
TD
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1,198,190
1,181,254
1,203,771
1,220,550
1,268,680
BMO
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
910,879
914,138
937,572
965,239
982,440
Scotiabank
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
952,333
939,773
942,028
949,201
943,849
National Bank
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
288,173
300,097
306,881
320,587
333,545
CIBC
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
723,376
724,545
731,952
743,446
764,857

Source: WOWA Data Labs

Balance Sheet Example:

Following is the balance sheet of the Royal Bank of Canada, the largest Canadian bank.

BALANCE SHEETSQ4/24
(Millions of Canadian dollars)
Period-end balances
ASSETS
Cash and due from banks56,723
Interest-bearing deposits with banks66,020
Securities
Trading183,300
Investment, net of applicable allowance256,618
439,918
Assets purchased under reverse repurchase agreements and securities borrowed350,803
Loans
Retail626,978
Wholesale360,439
987,417
Allowance for loan losses(6,037)
981,380
Other
Customers' liability under acceptances35
Derivatives150,612
Premises and equipment6,852
Goodwill19,286
Other intangibles7,798
Other assets92,155
Total Assets2,171,582
LIABILITIES AND EQUITY
Deposits
Personal522,139
Business and government839,670
Bank47,722
1,409,531
Other
Acceptances35
Obligations related to securities sold short35,286
Obligations related to assets sold under repurchase agreements and securities loaned305,321
Derivatives163,763
Insurance contract liabilities22,231
Other liabilities94,677
Subordinated debentures13,546
2,044,390
Equity attributable to shareholders
Preferred shares and other equity instruments9,031
Common shares20,952
Retained earnings88,608
Other components of equity8,498
127,089
Non-controlling interests (NCI)103
127,192
Total Liabilities and Equity2,171,582

One should note that an indentation means a subcategory when reading a balance sheet. In the example above, we have “ASSETS” and “LIABILITIES AND EQUITY” at the leftmost position, meaning that they are the most general categories.

Total Assets for Canada's domestic systematically important banks (D_SIBs) in $millions

We've compiled key performance metrics for 50+ Canadian financial institutions over 10 to 25 years.
Click here to purchase the data.
Bank...Q2 2021Q3 2021Q4 2021Q1 2022Q2 2022Q3 2022Q4 2022Q1 2023Q2 2023Q3 2023Q4 2023Q1 2024Q2 2024Q3 2024Q4 2024
RBC
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
2,006,531
1,974,405
2,031,050
2,076,107
2,171,582
TD
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1,955
1,911
1,967
1,967
2,062
BMO
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1,347,006
1,324,762
1,374,053
1,400,470
1,409,647
Scotiabank
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1,411
1,393
1,399
1,402
1,412
National Bank
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
423,477
433,927
441,690
453,933
462,226
CIBC
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
1.11
975,690
971,667
1,001,758
1,021,407
1,041,985

Assets

Beneath “Assets” and shifted to the right, we see various types of assets. These include Cash and due from banks, Interest-bearing deposits with banks, Securities, Assets purchased under reverse repurchase agreements, Loans, and Others.

"Cash and due from banks" primarily includes physical cash holdings (notes and coins), in-transit/clearing items, and nostro accounts for payment and settlement purposes. A nostro account is a bank account that a bank holds with another bank in a foreign country and in that foreign country's currency. Due from banks represents funds the bank has at other banks for operational purposes like payments clearing and settlements.

"Interest-bearing deposits with banks" represents funds placed with other financial institutions (including central banks) that earn interest. These are part of a bank's liquid asset management and include term deposits, money market deposits, and settlement balances with central banks that earn interest at the policy rate. While they earn interest, these deposits remain highly liquid and can be used for the bank's funding and liquidity management needs.

Securities

Beneath “securities”, there is an indentation, which means that we see the subcategories of this line beneath it. These subcategories are “trading” and “Investment, net of applicable allowance.” Securities on a bank's balance sheet represent financial instruments like government bonds, corporate bonds, equities, and other marketable securities.

Classification of Securities
Trading SecuritiesInvestment Securities
Held primarily to profit from short-term price movementsHeld for longer-term investment purposes
Marked-to-market (fair value) with changes going through profit and lossCan include securities held to maturity or available for sale
More actively bought and soldUsed for asset-liability management
Used for market-making and client facilitationSource of stable interest income
Part of banks' trading/market risk activitiesMay include less liquid securities
More liquid securities typicallySubject to credit loss allowances for debt securities
Changes in fair value may go through other comprehensive income rather than profit and loss (depending on classification)

Reverse Repo

The next line in RBC's balance sheet is “Assets purchased under reverse repurchase agreements”. These and securities borrowed are both forms of secured lending where the bank receives securities as collateral.

Reverse Repurchase Agreements

  • Bank lends money to counterparties
  • Receives securities as collateral
  • Counterparty agrees to repurchase the securities at a slightly higher price later
  • The difference in price represents interest earned
  • Usually short-term transactions (often overnight)
  • Used by banks for liquidity management and to earn interest income
  • Very safe lending as backed by securities collateral

Securities Borrowed

  • Bank borrows securities from counterparties
  • Provides cash or other securities as collateral
  • Pays a fee to borrow the securities
  • Often used to cover short positions or facilitate client trades
  • Also used to generate additional revenue through securities lending
  • Similar to reverse repos but the focus is on obtaining specific securities rather than lending money

Both these instruments are important for:

  • Bank's liquidity management
  • Supporting trading operations
  • Generating secured lending income
  • Facilitating market-making activities

Loans

Loans are the largest category of assets for banks. They include retail and wholesale loans.

Retail Loans

  • Made to individual consumers and small businesses
  • Typically smaller loan amounts
  • More standardized terms and approval processes
  • Examples include: Mortgages, Personal loans, Credit cards, Small business loans and Auto loans

Wholesale Loans

  • Made to larger businesses, corporations, and institutions
  • Typically larger loan amounts
  • More customized terms and structures
  • Often require more complex documentation
  • Examples include: Commercial real estate loans, Corporate credit facilities, Syndicated loans, Project financing, and Trade financing

Liabilities and Equity

The bottom half of the balance sheet lists amounts of Liabilities and Equities. A bank's most important and largest category of liabilities is its deposits. In the example above, RBC’s balance sheet classifies deposits based on the depositor. Personal deposits, Business and government deposits, and bank deposits are all reported. Other important liabilities of the bank include repurchase agreements and securities loaned and also derivative liabilities.

Disclaimer:

  • Any analysis or commentary reflects the opinions of WOWA.ca analysts and should not be considered financial advice. Please consult a licensed professional before making any decisions.
  • The calculators and content on this page are for general information only. WOWA does not guarantee the accuracy and is not responsible for any consequences of using the calculator.
  • Financial institutions and brokerages may compensate us for connecting customers to them through payments for advertisements, clicks, and leads.
  • Interest rates are sourced from financial institutions' websites or provided to us directly. Real estate data is sourced from the Canadian Real Estate Association (CREA) and regional boards' websites and documents.