| >As I was trying to point out to the parent commenter, conflating "$100m today" with "$100m at maturity" leads to clear contradictions, like saying that a bank could earn $20m on paper simply by buying bonds trading below par value. Or to put it another way – if bank A holds $100m face value of 10-year bonds yielding 4%, and bank B holds $100m face value of 10-year bonds yielding 2% (but worth, say, $80m at market price), how can you claim that those banks are on equally good footing? Equal assets should never be thought to mean equal footing. The banks will show the same number for assets locked up for 10 years, but the banks will also show that they have different returns listed on their finalcial statement for the HTM assets, and different revenue from capital! You cant and shouldnt expect to bank comparison to be easily reduced to a single measure, or for that measure to tell you something that is captured elsewhere. It is like expecting an athlete's height to tell you something about their speed or strength. HTM assets tell you the nominal value of assets they are holding to maturity. It is not intended to show how much they could raise if they had to liquidate it today. It is not intended to show what that yield is for their bonds. There are separate line items for that. If you change the valuation of the bonds to market value, then you lose sight of the mature value of those bonds. Replacing athlete height with athlete BMI tells you something different. |