Definition
Treasury Income (Banking)
Treasury income is the profit a bank earns from managing its investment portfolio, mainly gains and losses on government and corporate bonds and forex.
Banks hold large bond portfolios, partly to meet SLR requirements. When yields fall, bond prices rise and banks book treasury gains; when yields rise, they may face mark-to-market losses. Treasury income therefore swings with the interest-rate cycle.
Treasury profits can flatter a bank's earnings in a falling-rate environment and hurt them when rates climb. Analysts separate volatile treasury income from core net interest income to judge the durability of a bank's profits, since trading gains are not repeatable.
Related terms
- Held to Maturity (HTM)Held to Maturity is the bank investment category for securities intended to be held until they mature, valued at cost rather than market price.
- Other Income (Banking)Other income, or non-interest income, is the fee, commission, trading and miscellaneous income a bank earns beyond interest on loans.
- Available for Sale (AFS)Available for Sale is the bank investment category for securities not held to maturity or for active trading, which are marked to market with changes routed through reserves.
- G-Sec (Government Security)A G-Sec is a bond issued by the Government of India to borrow money, considered the safest rupee investment because it carries sovereign backing.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.