PART A · QUESTION 1
A bank raises its provisions on loans by US$10m, before tax. There is no cash movement, and no loan has been written off.
// EXAM HALL24 QUESTIONS · 30 MINUTES
Bank Financial Accountant Practice Test
Accruals and provisions, one bank's accounts, a month-end close, and the calls that fall to whoever stands behind the numbers.
BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED
// THE SHORT ANSWER
A bank financial accountant practice test asks whether you can stand behind a bank's numbers when someone would like them different. This paper has four parts: accruals, provisions and how loans are measured; one bank's accounts; a month-end close with a fee, a suspense balance and a late hedge document, set on an exhibit; and calls on overlays, journals, segments and inside information. Every question is original, and none comes from any bank's test. Sit it against a thirty-minute clock, or take it as practice.
BASIS Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.
// HOW TO SIT IT
Answer below as practice, and each read opens as you go. Or sit it as a test: 30 minutes, with every read held back until you finish.
PART A
The sums
What a bank's numbers are made of. Work each one before you look at the options.
PART A · QUESTION 2
A bank lends US$100m to sound borrowers at the start of the year. Under an expected-credit-loss standard, it books a provision of US$0.3m on day one.
Why, before anything has gone wrong?
PART A · QUESTION 3
Under expected-loss accounting, a performing loan is moved to the stage for a significant increase in credit risk. The borrower has missed no payment, but the provision against the loan jumps.
Why does it jump before any payment is missed?
PART A · QUESTION 4
A customer pays US$1.2m of interest in December for the coming calendar year. Nothing was due before then.
How much is income in this calendar year?
PART A · QUESTION 5
Rates rise sharply. The fixed-rate loans on a bank's books are now worth less to a buyer, but their carrying amount in the accounts has not moved.
Why has it not moved?
PART B
The bank's numbers
One bank, six questions. A calculator is fine; read the definitions in each question.
EXHIBIT J · THE BANK'S NUMBERS
One small bank's year. Figures in US$m.
| US$m | |
|---|---|
| Loans, net of provisions | 8,000 |
| Liquid assets | 2,000 |
| Total assets | 10,000 |
| Deposits | 7,000 |
| Wholesale funding, 600 due within three months | 2,200 |
| Equity | 800 |
| US$m | |
|---|---|
| Interest income | 560 |
| Interest expense | (300) |
| Net interest income | 260 |
| Fees | 40 |
| Total income | 300 |
| Costs | (165) |
| Impairment charge | (35) |
| Profit before tax | 100 |
| Tax | (28) |
| Profit after tax | 72 |
| Gross loans | Provision | |
|---|---|---|
| Stage 1 | 7,330 | 20 |
| Stage 2 | 600 | 30 |
| Stage 3 | 200 | 80 |
| Details | US$m |
|---|---|
| Regulatory deductions from equity | 80 |
| Risk-weighted assets | 5,400 |
| Gross loans on the general ledger | 8130.0 |
| Gross loans on the loan system | 8126.8 |
PART B · QUESTION 6
From Exhibit J, on total assets.
What is the net interest margin?
PART B · QUESTION 7
From Exhibit J.
What is the cost-to-income ratio?
PART B · QUESTION 8
From Exhibit J.
What is the return on equity?
PART B · QUESTION 9
From Exhibit J's provision table.
What is the coverage on stage 3 loans?
PART B · QUESTION 10
In Exhibit J, stage 1 carries a provision of 0.27% and stage 2 carries 5.0%. US$100m of performing loans now shows a significant increase in credit risk.
What does that do to this year's profit before tax?
PART B · QUESTION 11
The day before close, Exhibit J's general ledger is US$3.2m above the loan system. Someone suggests posting it to a suspense account, so the close can finish on time.
What do you do first?
PART C
The close pack
Day three of the close, seven questions. Read every open item before you start.
EXHIBIT Z · THE CLOSE PACK
Day three of the June close at a mid-sized bank. Profit before these items is US$10,000,000 for the month.
| Item | What is open |
|---|---|
| Fee | A US$600,000 arrangement fee on a new five-year loan went to income in full this month. |
| Suspense | US$2.1m, unexplained for four months, and growing. |
| Accrual | A system upgrade stopped June's interest accrual from posting. Estimate US$1.8m. The fix is two weeks away. |
| Invoice | US$3m of marketing work done in June, invoice received. The head of retail wants it in July. |
| Hedge | A swap hedging fixed-rate loans was traded in March. Its hedge documentation was signed in June. |
| Loan | A stage 3 loan has made its first payment in a year. The head of credit wants it back in stage 1. |
PART C · QUESTION 12
From Exhibit Z: the US$600,000 arrangement fee on the five-year loan, which is part of the loan's return.
About how much belongs in this month's income?
PART C · QUESTION 13
Exhibit Z's suspense account holds US$2.1m. It has sat there for four months, and it is growing.
What do you do?
PART C · QUESTION 14
In Exhibit Z, the system upgrade stopped June's interest accrual from posting. The estimate is US$1.8m, and the fix is two weeks away.
What do you do?
PART C · QUESTION 15
In Exhibit Z, the head of retail asks you to move a US$3m marketing invoice for work done in June into July. 'We are on budget if it moves.'
What do you do?
PART C · QUESTION 16
Take Exhibit Z's month. Profit before these items is US$10m, and the team's working materiality is 5% of that.
Which items pass that line on their own?
PART C · QUESTION 17
In Exhibit Z, a swap hedging fixed-rate loans was traded in March. The hedge documentation was signed in June.
What does that mean for March to June?
PART C · QUESTION 18
In Exhibit Z, the head of credit wants a stage 3 loan moved back to stage 1. 'They have made their first payment in a year.'
What do you do?
PART D
The calls
When the number is yours to stand behind, and someone would like it to be different.
PART D · QUESTION 19
The CFO's team asks you to release a US$15m management overlay this half, just as profit falls short of guidance. Nothing in the loan book has changed since it was booked.
What do you do?
PART D · QUESTION 20
A bank extends a struggling borrower's repayments by two years and cuts its interest rate. The loan is now reported as performing, because no payment is overdue.
Signal or noise?
PART D · QUESTION 21
Reviewing journals, you find one for US$400,000 posted to income at 11pm on the last day of the quarter by a senior manager, with no support attached.
What do you do?
PART D · QUESTION 22
Management proposes moving a loss-making business into the 'Other' segment in this year's results. It is the same business, doing the same thing.
What do you ask?
PART D · QUESTION 23
A junior colleague finds an error in last year's published accounts. It is small against profit, but it runs through several lines.
What comes first?
PART D · QUESTION 24
A week before results, an analyst you know from university messages you: 'Just roughly, are you going to beat consensus?' The bank's shares are listed.
What do you do?
0 OF 24 ANSWERED · 0 WITH THE SENIOR READ · 0 STANDS UP · 0 OFF THE LINE
// THE REST OF THE ROUND
Every question here is original; none is any bank's real test. Written for: Financial accountant.
- Financial accountant: the interview questions, against a two-minute clock.
- Situational judgement, for any seat.
- The assessment centre: a whole case in forty-five minutes.
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