Glossary and Abbreviations

A. SELECTED ACCOUNTS

1. Total assets refer to the sum of all assets, adjusted to net off the accounts “Due from Head Office/Branches/Agencies” and “Due to Head Office/Branches/Agencies” of foreign bank branches.
2. For purposes of computing the average, one period covers 12 months
   1. Average assets refer to the sum of total assets for two periods divided by 2.
   2. Average capital refers to the sum of total capital accounts for two periods divided by 2.
   3. Average earning assets refer to the sum of earning assets for two periods divided by 2.
   4. Average interest-bearing liabilities refer to the sum of interest-bearing liabilities for two periods divided by 2.
3. Total capital refers to the sum of paid-in capital of locally incorporated banks, assigned capital and the qualified capital allowable component of the net “Due To/Due From Head Office/Branches/Agencies” accounts of branches of foreign banks plus surplus, surplus reserves, undivided profits and appraisal increment reserves.
   
4. Earning assets refer to the sum of loans (gross of allowance for probable losses) and investments (gross of allowance for probable losses), exclusive of equity investment (gross of allowance for probable losses).
   
5. Fee-based income refers to the sum of bank commissions, service charges/fees, and other fees/commissions.
   
6. Interest-bearing liabilities refer to the sum of deposit liabilities, bills payable and unsecured subordinated debt.
   
7. Liquid assets refer to 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).
   
8. Net income before tax refers to the sum of net operating income and extraordinary credits/(charges).
   
9. Net interest income refers to the difference between total interest income and total interest expense.
   
10. Net operating income refers to the difference between operating income and operating expenses.
    
11. Non-interest income refers to the sum of fee-based income, trading income, trust department income and other non-interest income.
    
12. Non-performing loans (NPL) refer to 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 installments), including the outstanding balance of loans payable in monthly installments when three (3) or more installments are in arrears, the outstanding balance of loans payable daily, weekly or semi-monthly installments 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. Effective September 2002, NPLs exclude loans classified as Loss in the latest BSP examination which are fully covered by allowance for probable losses and applicable to a bank with no unbooked valuation reserves and other capital adjustments required by the BSP (Circular No. 351).
    
13. Non-performing assets (NPA) refer to the sum of non-performing loans (NPL) and real and other properties owned and acquired (ROPOA). Effective March 2003, NPAs exclude performing sales contract receivable, which met certain requirements under Circular No. 380.
    
14. Distressed assets refer to the sum of NPLs, ROPOA, gross and current restructured loans. Starting July 2004, distressed assets refer to the sum of NPLs, ROPOA, gross and performing restructured loans.
    
15. Gross assets refer to total assets, net of reserves plus loan loss reserves (LLR) plus provision for ROPOA.
    
16. Operating expenses refer to the sum of bad debts written off/provisions for probable losses, overhead costs and other expenses.
    
17. Operating income refers to the sum of net interest income and non-interest income.
    
18. Overhead costs refer to the sum of non-loan related operating expenses such as compensation/fringe benefits, depreciation and amortization, etc.
    
19. Trading income refers to the sum of trading gains/(losses), foreign exchange profits/(losses), gold trading gains/(losses) and profit/(loss) on sale of redemption of investments.
    
    
    

B. FINANCIAL AND OTHER RATIOS

1. Capital adequacy ratio (CAR) refers to 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, effective 1 July 2001 under BSP Circular No. 280 dated 29 March 2001. Under BSP Circular No. 360 dated 3 December 2002, which took effect 1 July 2003, applying only to universal/commercial banks, computation of CAR incorporates market risks in addition to credit risks.
   
2. Cost-to-income ratio refers to the ratio of operating expenses (exclusive of bad debts written off/provisions for probable losses) to operating income.
   
3. Density ratio refers to the ratio of the total number of domestic banking offices to the total number of cities/municipalities in the Philippines.
   
4. Distressed assets ratio refers to the ratio of distressed assets to total loans (gross of allowance for probable losses), inclusive of interbank loans, plus ROPOA, gross
   
5. Earning asset yield refers to the ratio of total interest income to average earning assets.
   
6. Funding cost refers to the ratio of total interest expense to average interest-bearing liabilities.
   
7. Interest spread refers to the difference between earning asset yield and funding cost.
   
8. Liquid assets ratio refers to the ratio of liquid assets to total deposits.
   
9. Net interest margin refers to the ratio of net interest income to average earning assets.
   
10. NPA coverage ratio refers to the ratio of allowance for probable losses on non-performing assets (NPA) to total NPA.
    
11. NPA ratio refers to the ratio of NPA to total assets, gross of allowance for probable losses.
    
12. NPL coverage ratio refers to the ratio of allowance for probable losses on non-performing loans (NPL) to total NPL.
    
13. NPL ratio refers to the ratio of non-performing loans (NPL) to total loans (gross of allowance for probable losses), inclusive of interbank loans.
    
14. Population-to-banking offices ratio refers to the ratio of the total population to the total number of domestic banking offices.
    
15. Return on assets refers to the ratio of net income after tax (NIAT) to average assets.
    
16. Return on equity refers to the ratio of NIAT to average capital.