GLOSSARY OF TERMS

Accumulated Depreciation
A contra, or offset, account that is coupled with the property, plant, and equipment asset account in which the original costs of the long-term operating assets of a business are recorded. The accumulated depreciation contra account accumulates the amount of depreciation expense that is recorded period by period. So the balance in this account is the cumulative amount of depreciation that has been recorded since the assets were acquired. The balance in the accumulated depreciation account is deducted from the original cost of the assets recorded in the property, plant, and equipment asset account. The remainder, called the book value of the assets, is the amount included on the asset side of a business.
Amortized Cost
The cost of a security adjusted for the amortization of any purchase premium or discount.
Assets
Items owned by the company or expenses that have been paid for but have not been used up.
Available-for-Sale
Investments intended to be held for an indefinite period of time, which may be sold in response to needs for liquidity or changes in interest rates, exchange rates or equity prices.
Capital Account
That part of the balance of payments accounts that records demands for and supplies of a currency arising from purchases or sales of assets.
Capital Adequacy Ratio (CAR)
The ratio of capital to risk weighted assets computed in accordance with the risk-based capital adequacy framework (patterned after the 1988 Basel Capital Accord) that took into account credit risks.
Cash Equivalents
Instruments or investments of such high liquidity and safety that they are virtually equal to cash.
Cash Ratio
The ratio of cash and cash equivalents to liabilities; in the case of a bank, the ratio of cash to total deposit liabilities.
Corporate Governance
Set of processes, customs, policies, laws, and institutions affecting the way a corporation (or company) is directed, administered or controlled. Corporate governance also includes the relationships among the many stakeholders involved and the goals for which the corporation is governed. The principal stakeholders are the shareholders, the board of directors, employees, customers, creditors, suppliers, and the community at large.
Cost-to-Income Ratio
The ratio of operating expenses (exclusive of bad debts written off/provisions for probable losses) to operating income.
Credit Risk
The risk to earnings or capital arising from the borrowers' failure to pay principal and/or interest at maturity dates.
Executive Committee
A subcommittee which has well defined executive powers usually spelled out in the charter or by-laws and which meets frequently to manage the affairs and further the purposes of an organization or entity. These are commonly empanelled as well when an organization has a large Board of Directors such as an international labor union, large corporations (with thousands of stock holders) or national and international organizations.
Financial Assets
Include cash and other financial instruments. The Bank clarifies its financial assets in the following categories: financial assets at fair value through profit or loss; loans and receivables; held-to-maturity investments; and available-for-sale financial assets.
Financial Statement (or financial report)
A formal record of the financial activities of a business, person, or other entity.
Gross Assets
Total assets, net of reserves plus loan loss reserves (LLR) plus provision for ROPOA.
Gross Receipts Tax or gross excise tax
A tax on the total gross revenues of a company, regardless of their source. A gross receipts tax is similar to a sales tax, but it is levied on the seller of goods or services rather than the consumer.
Held-to-Maturity
Non-derivative financial assets with fixed or determinable payments and fixed maturities that the Bank's management has the positive intention and ability to hold to maturity.
Income Tax
A government tax on the income earned by an individual or corporation.
Interest Rate Risk
The risk to earnings or capital arising from mismatches of the timing within which interest rates on assets and liabilities can be changed.
Legal Liability
The legal bound obligation to pay debts.
Legal Risk
The risk to earnings or capital that may arise as a result of unenforceable contracts, lawsuits or adverse judgments.
Liquid Assets
The sum of cash and due from banks and investments (net of allowance for probable losses) exclusive of equity investments (net of allowance for probable losses).
Liquid Assets Ratio
The ratio of liquid assets to total deposits.
Liquidity Risk
The risk to earnings or capital resulting from the failure to meet cash flow obligations as they fall due.
Loans and Receivables
Non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
Market Risk
The risk to earnings arising from the possible decline in value of trading accounts and investments in equities and debt instruments.
Neutralizing Risk
The risk inherent in banking must be recognized, monitored and controlled by developing and utilizing operating guidelines to control these risks, including those covering capital adequacy, loan loss reserves, asset concentration, liquidity, risk management and internal controls with the general purpose of limiting imprudent risk-taking and conduct activities in an appropriate manner.
Net Book Value
The current book value of an asset or liability; that is, its original book value net of any accounting adjustments such as depreciation.
Net Interest Income
The difference between total interest income and total interest expense.
Net Operating Income
The difference between operating income and operating expenses.
Non-Performing Assets (NPA)
The sum of non-performing loans (NPL) and real and other properties owned and acquired (ROPOA).
Non-Performing Loans (NPL)
Past due loan accounts whose principal and/or interest is unpaid for thirty (30) days or more after due date (applicable to loans payable in lump sum and loans payable in quarterly, semi-annual or annual instalments), including the outstanding balance of loans payable in monthly instalments when three (3) or more instalments are in arrears, the outstanding balance of loans payable daily, weekly or semi-monthly instalments when the total amount of arrearages reaches ten percent (10%) of the total loan receivable balance, restructured loans which do not meet the requirements to be treated as performing loans under existing rules and regulations, and all items in litigation.
Operating Expenses
The sum of bad debts written off/provisions for probable losses, overhead costs and other expenses.
Operating Expense Ratio
The percentage of the assets that were spent to run a mutual fund (as of the last annual statement).
Operating Income
The sum of net interest income and non-interest income.
Operations Risk
The risk to earnings or capital that may arise as a result of weakness in organizational structure, poor oversight function of the board of directors and senior management, defective personnel recruitments/selecting/hiring policy, weak internal control system, inadequate internal and external audit coverage, and deficient management information system.
Organizational Chart
A diagram that shows the structure of an organization and the relationships and relative ranks of its parts and positions/jobs.
Profitability Ratios
Ratios that focus on the profitability of the firm. Profit margins measure performance with relation to sales. Rate of return ratios measure performance relative to some measure of size of the investment.
Return on Assets
The ratio of net income after tax (NIAT) to average assets.
Return on Equity
The ratio of NIAT to average capital.
Risk Management
The identification, assessment, and prioritization of risks (defined in ISO 31000 as the effect of uncertainty on objectives, whether positive or negative) followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize the realization of opportunities.
Savings Accounts
Accounts maintained by retail financial institutions that pay interest but cannot be used directly as money (for example, by writing a cheque). These accounts let customers set aside a portion of their liquid assets while earning a monetary return.
Site Map
List of pages of a web site accessible to crawlers or users. It can be either a document in any form used as a planning tool for web design, or a web page that lists the pages on a web site, typically organized in hierarchical fashion. This helps visitors and search engine bots find pages on the site.
Total Assets
The sum of all assets, adjusted to net off the accounts of foreign bank branches.
Total Capital
The sum of paid-in capital of locally incorporated banks, assigned capital and the qualified capital allowable component of the net accounts of branches of foreign banks plus surplus, surplus reserves, undivided profits and appraisal increment reserves.
Value Added Tax (VAT)
The method of indirect taxation whereby a tax is levied at each stage of production on the value added at that specific stage.