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A balance sheet is one of the four main financial statements that businesses have to produce. It describes how much stuff you've got (assets) and how much money

A balance sheet is one of the four main financial statements that businesses have to produce. It describes how much stuff you've got (assets) and how much money you owe others (liabilities). To expand your balance sheet means to load up on assets. In the parent comment's specific example, it means that the bank could simply hold onto the money it makes, rather than paying that money out as bonuses to the executives or dividends to the shareholders. This would give the bank a better cash cushion to weather a storm (e.g. interest rates rising unexpectedly, account holders pulling out their deposits, etc.)

BurningFrog 3y ago
Thanks! So "expanding their balance sheet" here translates to "keeping the money"
- rrrrrrrrrrrryan 3y ago
  In this case, it's very close, yes. It's worth noting that you can also expand your balance sheet by buying any assets: spending the money on real estate, government bonds, or even using the money to buy your own company stock would also expand the balance sheet, as long as the company retains ownership of those assets. But for people familiar with basic business terminology, it communicates something else, too. In business, there's a core belief that money at rest is money wasted. You generally want to use your money to buy something rather than letting it pile up. Saying that you're using the money to "expand your balance sheet" implies that we shouldn't think of that money as merely idle, undeployed capital - in fact, it's being used for a very specific purpose: to make the business healthier. Companies with healthier balance sheets are better prepared to handle unexpected scenarios, and their stock is more attractive to investors. A closer layman's translation might be, "keeping the profits, to make the business healthier."
  - BurningFrog 3y ago
    Thanks. I've actually silently been wondering about this phrase for years!

BurningFrog 3y ago

Thanks! So "expanding their balance sheet" here translates to "keeping the money"

rrrrrrrrrrrryan 3y ago
In this case, it's very close, yes. It's worth noting that you can also expand your balance sheet by buying any assets: spending the money on real estate, government bonds, or even using the money to buy your own company stock would also expand the balance sheet, as long as the company retains ownership of those assets. But for people familiar with basic business terminology, it communicates something else, too. In business, there's a core belief that money at rest is money wasted. You generally want to use your money to buy something rather than letting it pile up. Saying that you're using the money to "expand your balance sheet" implies that we shouldn't think of that money as merely idle, undeployed capital - in fact, it's being used for a very specific purpose: to make the business healthier. Companies with healthier balance sheets are better prepared to handle unexpected scenarios, and their stock is more attractive to investors. A closer layman's translation might be, "keeping the profits, to make the business healthier."
- BurningFrog 3y ago
  Thanks. I've actually silently been wondering about this phrase for years!