Glossary

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                                                                           GLOSSARY            PEER GROUPS            DIAMONDS

 

Glossary
Indicators Indicators Definition Formula
Administrative expense / assets Administrative expenses compared to average assets. Depreciation and amortization expenses are also considered in the calculation of the ratio. Aids to estimate the relative importance of overhead expenses incurred in the delivery of services to the clients. (Administrative expense + Depreciation and amortization expense) / Average assets
Assets Total value of resources controlled by the Financial Service Providers (FSP) as a result of past events and from which future economic benefits are expected to flow to the FSP. For calculation purposes, assets are the sum of each individual asset accounts listed.  - Not applicable -
Average assets Mean value calculated on the basis of total assets between two consecutive periods, including monthly, quarterly and annual data if available.

Average values are calculated based on existing prior period data. In addition, if interim results other than annual results are available then those data points are incorporated into the average calculation. When more than one data exists for the same date - for example interim results for the four quarter as well as annual results for that same end date then an average is taken of these values to arrive at one single value for this date and proceed with the averages calculation as described above. 

 

E.g. If the FSP reports data points (e.g. Assets) for different time periods:  

Asset value as on A: (ANN-start of the fiscal year),  

Asset value as on B: (QTR 4 of PY),  

Asset value as on C: (QTR1-FY),  

Asset value as on D: (QTR2-FY),  

Asset value as on E: (QTR3-FY),  

Asset value as on F: (QTR4-FY) and  

Asset value as on G: (ANN-end of the FY).  

 

Then as on date i.e. ANN FY ‘G’ the value of average asset =  

(average of value reported for (A, B), C, D, E, average of (F, G))  
 

Note: PY - Previous Year, FY- Fiscal year, QTR- Quarter, ANN-Annual 

Average deposit account balance / GNI per capita

Average deposit account balance compared to local GNI per capita to estimate the outreach of deposit accounts relative to the low-income population in the country. 

The indicator measured with GNI per capita that is calculated in national currency is usually converted to U.S. dollars at official exchange rates for comparisons across economies, although an alternative rate is used when the official exchange rate is judged to diverge by an exceptionally large margin from the rate actually applied in international transactions. To smooth fluctuations in prices and exchange rates, a special Atlas method of conversion is used by the World Bank.

Average deposit balance per account / GNI per capita
Average deposit balance per account Total deposits divided by number of deposit accounts.  Allows assessing a financial institution's deposit base in terms of the amount and volume of deposit accounts placed in it.  Deposits/ Number of deposit accounts 
Average deposit balance per depositor  Total deposits divided by total of depositors. Allows to measure outreach in depositors by analyzing a financial institution's depositor base.  Deposits/ Number of depositors 
Average deposit balance per depositor / GNI per capita

Average deposit balance per depositor compared to local GNI per capita to estimate the coverage of low-income population achieved through deposits. 

The indicator measured with GNI per capita that is calculated in national currency is usually converted to U.S. dollars at official exchange rates for comparisons across economies, although an alternative rate is used when the official exchange rate is judged to diverge by an exceptionally large margin from the rate actually applied in international transactions. To smooth fluctuations in prices and exchange rates, a special Atlas method of conversion is used by the World Bank.

Average deposit balance per depositor / GNI per capita
Average equity Mean value calculated on the basis of total equity between two consecutive periods, including monthly, quarterly and annual data, if available.  Methodology of average calculation is same as explained for Average Assets.
Average gross loan portfolio Mean value calculated on the basis of total gross loan portfolio between two consecutive periods, including monthly, quarterly and annual data, if available. Methodology of average calculation is same as explained for Average Assets.
Average loan balance per borrower Gross loan portfolio divided by total number of active borrowers. Represents a value of an outstanding finance accessed by the borrowers. Gross loan portfolio/ Number of active borrowers
Average loan balance per borrower / GNI per capita

Average outstanding loan balance compared to local GNI per capita to estimate the outreach of loans relative to the low-income population in the country. 

The indicator measured with GNI per capita that is calculated in national currency is usually converted to U.S. dollars at official exchange rates for comparisons across economies, although an alternative rate is used when the official exchange rate is judged to diverge by an exceptionally large margin from the rate actually applied in international transactions. To smooth fluctuations in prices and exchange rates, a special Atlas method of conversion is used by the World Bank.

Average loan balance per borrower/ GNI per capita
Average outstanding balance Gross loan portfolio divided by number of outstanding loans. Represents the average loan size remaining to be paid. Gross loan portfolio/ Number of loans outstanding
Average outstanding balance / GNI per capita

Average outstanding loan balance compared to local GNI per capita to estimate the outreach of loans relative to the low-income population in the country. 

The indicator measured with GNI per capita that is calculated in national currency is usually converted to U.S. dollars at official exchange rates for comparisons across economies, although an alternative rate is used when the official exchange rate is judged to diverge by an exceptionally large margin from the rate actually applied in international transactions. To smooth fluctuations in prices and exchange rates, a special Atlas method of conversion is used by the World Bank.

Average outstanding balance / GNI per capita
Average salary/ GNI per capita

Average personnel expense compared with the local GNI per capita. Provides a proxy for labor costs in the local market. 

The indicator measured with GNI per capita that is calculated in national currency is usually converted to U.S. dollars at official exchange rates for comparisons across economies, although an alternative rate is used when the official exchange rate is judged to diverge by an exceptionally large margin from the rate actually applied in international transactions. To smooth fluctuations in prices and exchange rates, a special Atlas method of conversion is used by the World Bank.

Average personnel expense / GNI per capita
Borrowers per loan officer Total number of active borrowers divided by number of loan officers. Aids to assess the loan officers’ productivity by measuring the average caseload of borrowers managed by each loan officer. Number of active borrowers / Number of loan officers
Borrowers per staff member Total number of active borrowers divided by total personnel. Aids to assess the overall productivity of the financial institution's employees in terms of serving borrowers. Number of active borrowers / Number of personnel
Capital/asset ratio Total equity compared to assets. A measure of the solvency of a FSP, helping to assess its ability to meet its obligations and absorb unexpected losses. It is the reciprocal of the Debt to Equity ratio. Total Equity/ Total Assets
Cost per borrower Total operating expense distributed among average number of borrowers. Represents the average cost of maintaining an active borrower. Operating expense/ Average number of active borrowers
Cost per loan Total operating expense distributed among average number of loans. Represents the average cost of maintaining an active loan outstanding. Operating expense/ Average number of loans outstanding
Debt to equity ratio Total liabilities compared to equity. Measures the overall leverage that FSPs has incurred to finance its portfolio and other assets and also how much cushion it has to absorb losses after all liabilities are paid. Total Liabilities/ Total Equity
Deposit accounts per staff member Total number of deposit accounts divided by total personnel. Aids to assess the overall productivity of the financial institution's employees in terms of managing deposit accounts. Number of deposit accounts / Number of personnel
Depositors per staff member Total number of depositors divided by total personnel. Aids to assess the overall productivity of the financial institution's employees in terms of attending depositors. Number of depositors / Number of personnel
Deposits The total value of funds placed in an account with the FSP that are payable to a depositor.  This includes accounts such as current / transactional accounts, term accounts, interest bearing accounts, and e-money accounts.  - Not applicable -
Deposits to assets Total deposits compared to assets. Aids to determine the portion of FSPs assets that are funded by deposits. Total Deposits / Total Assets
Deposits to loans Total deposits compared to gross loan portfolio. Measures the portion of FSPs gross loan portfolio against the deposits. Deposits / Gross Loan Portfolio
Equity The residual interest in the assets of the financial institution after deducting all its liabilities (IAS 1). For calculation purposes, equity is the sum of each equity account listed. Equity = Assets – Liabilities
Financial expense / assets Total financial expenses divided by average assets. Aids to determine the proportion of total financial expense incurred by a FSP to fund its assets. Total interest, fees and commissions incurred on all liabilities including deposit accounts held by the financial institution, as well as gain (losses) from financial liabilities and the gain or loss on the net monetary position are considered for its calculation. Financial expense on funding liabilities / Average  assets
Financial revenue / assets Total financial revenue divided by average assets. Represents the total revenue generated by a FSP's core business operations as a percentage of its assets. Income for interest, fees and commissions for financial services, other operational income as well as gains (losses) on financial assets (realized or unrealized) and foreign exchange gains and losses are considered for its calculation. Financial revenue/ Average assets
Gross Loan Portfolio All outstanding principals due for all outstanding client loans. This includes current, delinquent, and renegotiated loans, but not loans that have been written off. It also includes off balance sheet portfolio.  - Not applicable -
Gross loan portfolio to assets Gross loan portfolio compared to total assets. Measures FSPs allocation of assets to its lending activity, considered it to be the primary business activity for the FSP. Gross loan portfolio / Total Assets
Loan loss rate Total amount of loans written off, net of recoveries, compared to average gross loan portfolio. Allows a more comprehensive analysis of impairment loan losses from write offs by considering the value of recovered loans into the overall ratio calculation. Write-offs - Amount recovered from written-off loans) / Average gross loan portfolio
Loan officers The number of employees whose main activity is to manage a portion of the gross loan portfolio. A loan officer is a staff member who is directly responsible for arranging and monitoring client loans. - Not applicable -
Loan portfolio disbursed The value of all loans disbursed in cash during the period, regardless of whether they are performing, non performing, or written off. This value should not be confused with the gross loan portfolio, which can be several times less than the value disbursed. - Not applicable -
Loans per loan officer Total number of loans divided by number of loan officers. Aids to assess the loan officer’s productivity by measuring the average caseload of outstanding loans managed by each loan officer. Number of loans outstanding / Number of loan officers
Loans per staff member Total number of loans divided by total personnel. Aids to assess the overall productivity of the financial institution's employees in terms of managing outstanding loans. Number of loans outstanding / Number of personnel
Non-earning liquid assets as a % of total assets Total cash and cash equivalents compared to total assets. It is an important liquidity indicator that aids to assess how the cash and cash-like assets can support its asset base as well as measures its sufficiency to meet obligations incurred to fund its assets. Short-term investments are also considered as component of cash and cash equivalents. Cash and cash equivalents /Total assets
Number of active borrowers The number of individuals or entities who currently have an outstanding loan balance with the FSP or are primarily responsible for repaying any portion of the gross loan portfolio. Individuals who have multiple loans with FSPs are counted as a single borrower.  - Not applicable -
Number of active clients The number of active clients who are currently accessing any of the financial institution's services; i.e., they have a loan, deposit, insurance account or other relationship that is active as of the report date. Individuals who access multiple services with a financial institution should be counted as a single client. Individuals who are not currently receiving services are not included. Neither borrowers whose loans have been written off nor depositors who have not had a deposit, withdrawal, or interest earned in the past 12 months are considered to be active. - Not applicable -
Number of deposit accounts The number of deposit accounts opened with the FSP whose balances the FSP is liable to repay. The number should be based on the number of individual accounts rather than on the number of groups.  This includes accounts such as current / transactional accounts, term accounts, interest bearing accounts, and e-money accounts. - Not applicable -
Number of depositors The number of individuals who currently have funds on deposit with the financial institution. This number applies only to deposits held by a financial institution, not to those deposits held in other institutions by the financial institution's clients. The number should be based on the number of individuals rather than the number of groups. A single depositor may account for multiple deposit accounts. This includes accounts such as current / transactional accounts, term accounts, interest bearing accounts, and e-money accounts. - Not applicable -
Number of loans disbursed The number of loans disbursed during the period. For FSPs using a group-lending methodology, the number of loans should refer to the number of individuals receiving loans as part of a group loan, unless the FSP specifies a different definition. If one person receives more than one loan in the period, each loan should be counted. - Not applicable -
Number of loans outstanding The number of loans in the gross loan portfolio. For FSPs using a group lending methodology, the number of loans should refer to the number of individuals receiving loans as part of a group or as part of a group loan. - Not applicable -
Number of offices  The number of staffed points of service and administrative sites / branches used to deliver or support the operations of FSPs and wide array of face-to-face and automated services to clients. - Not applicable -
Operating expense / loan portfolio Total operating expense compared to average gross loan portfolio. Measures all costs incurred to deliver loans (personnel and administrative expenses as well as non-cash expenses such depreciation and amortization). Operating expense / Average gross loan portfolio
Operating expense/ assets Total operating expense compared to average assets. Aids to determine the proportion of total operational expenses incurred to support core activities of the financial institution. Operating expense / Average assets
Operational self sufficiency Measures the FSPs ability to cover its costs through operating incomes. Financial expense, impairment losses on loans and operating expenses are included in the calculation as they are a normal and significant cost of operating a FSP. Financial revenue / (Financial expense on funding liabilities + Net Impairment Loss on gross loan portfolio + Operating expense)
Other Points of Service The number of points of service for clients other than physical branch units.  - Not applicable -
Percentage of female borrowers Number of active women borrowers as a percentage of total borrowers at period end. Number of active female borrowers/ Number of active borrowers
Personnel The number of individuals who are actively employed by an entity. This number includes contract employees or advisors who dedicate a substantial portion of their time to the entity, even if they are not on the entity's employee’s roster. - Not applicable -
Personnel allocation ratio Number of loan officers divided by total personnel. Measures the allocation of staff to activities directly involved in a financial institution's lending process, the core business operation of a financial institution. Number of loan officers / Number of personnel
Personnel expense/ assets Total staff expense compared to average assets. Aids to determine the proportion of total expenses incurred in exchange of services rendered by employees during the period.  Personnel expense / Average assets
Personnel expense/ loan portfolio Total staff expense compared to average gross loan portfolio. Aids to assess level of achievement in staff efficiency regarding delivery of loans. Personnel expense/ Average gross loan portfolio
Portfolio at risk > 30 days (%) Represents the portion of loans greater than 30 days past due, including the value of all renegotiated loans (restructured, rescheduled, refinanced and any other revised loans) compared to gross loan portfolio. The most accepted measure of a financial institution's portfolio quality. (Outstanding balance, portfolio overdue > 30 days + Renegotiated loans)/ Gross loan portfolio
Portfolio at risk > 90 days (%) Represents the portion of loans greater than 90 days past due, including the value of all renegotiated loans (restructured, rescheduled, refinanced and any other revised loans) compared to gross loan portfolio. Indicates loans considered to be higher risk based on its current performance.  (Outstanding balance, portfolio overdue > 90 days + Renegotiated loans) / Gross Loan Portfolio
Profit margin Net operating income compared to financial revenue. Aids to measure a financial institution's profitability from earnings on core business operations. Determines what percentage of revenues generated from those activities remains after all financial, credit impairment losses and operating expenses are charged. Net operating income/ Financial revenu
Provision for loan impairment/ assets Impairment losses on loans, net of recoveries on loans written off, compared to average assets. Represents the actual expense incurred due to credit losses or write offs in the portfolio. Net impairment loss on gross loan portfolio / Average assets
Return on assets Net operating income (less of taxes) compared to average assets. Measures how the FSP is managing its assets to optimize its profitability. This ratio is net of income taxes and excludes donations and non-operating items. (Net operating income, less Taxes)/ Average assets
Return on equity Net operating income (less of taxes) compared to average equity. Measures a FSP's ability to build equity through retained earnings. This ratio is net of income taxes and excludes donations and non-operating items. (Net operating income, less Taxes)/ Average equity
Risk coverage Allowance for loan impairment losses compared to portfolio overdue more than 30 days plus renegotiated loans. Measures how much of this portfolio at risk are covered by a financial institution's impairment loss allowance, allowing to estimate how prepared a financial institution is to absorb credit loan losses at that point of time. Impairment loss allowance/ PAR > 30 days
Total expense / assets All expenses incurred to support a financial institution's core business activities (financial, credit impairment losses and operating expenses) compared to average assets. Allows an overall measure of expenses incurred in a given period. (Financial expense on funding liabilities + Impairment loss (reversal of impairment loss on gross loan portfolio) + Operating expense) / Average  assets
Write-off ratio Total value of loans written off compared to average gross loan portfolio. Represents the percentage of a financial institution's loans that have been removed from the balance of the gross loan portfolio because they are highly unlikely to be repaid. Value of loans written-off / Average gross loan portfolio
Yield on gross portfolio (nominal) Financial revenue from loans compared to average gross loan portfolio. Aids to estimate the FSP's ability to generate revenues from interest, fees and commissions on the gross loan portfolio. Income from late fees and penalties are also included. Financial revenue from loans/ Average gross loan portfolio
Yield on gross portfolio (real) Nominal yield on gross portfolio adjusted for inflation. (Yield on Gross Portfolio (nominal) - Inflation Rate)/ (1 + Inflation Rate)

 

 

Peer Group Categories
Group Categories Criteria
Age New 1 to 4 years
Young 4 to 8 years
Mature

More than 8 years

Charter Type

Bank

 
Credit Union  
NBFI  

NGO

 
Rural Bank  
Financial Intermediation (FI) Non FI No voluntary savings
Low FI Voluntary savings < 20% of total assets

High FI

Voluntary savings > 20% of total assets
Lending Methodology Individual  

Solidarity Group

 

Individual / Solidarity

 
Village Banking  
Outreach Large Number of borrowers > 30,000
Medium Number of borrowers 10,000 to 30,000
Small Number of borrowers < 10,000
Profit Status For Profit Registered as a for profit institution
Not for profit Registered in a non-profit status
Region Africa Sub-Saharan Africa
Asia South Asia and East Asia and the Pacific
ECA Eastern Europe and Central Asia
LAC Latin America and the Caribbean
MENA Middle East and North Africa
Scale (Gross Loan Portfolio in USD) Large Africa, Asia, ECA, MENA: > 8 million; LAC > 15 million
Medium Africa, Asia, ECA, MENA: 2 million - 8 million; LAC: 4 million - 15 million
Small Africa, Asia, ECA, MENA: < 2 million; LAC: < 4 million
Sustainability Non-FSS Financial self-sufficiency < 100%
FSS Financial self-sufficiency = 100%
Target Market (Depth = Avg. Loan Balance per Borrower/GNI per Capita) Low end Depth < 20% OR average loan size < USD 150
Broad Depth between 20% and 149%
High end Depth between 150% and 250%
Small business Depth over 250%

 

 

 

Diamonds
Level Annual Diamond
1 Profile is visible
2 Level 1 and some data on products and clients for the year
3 Levels 1 and 2 and some financial data for the year
4

Levels 1-3 and audited financial statements are published for the year

5 Levels 1-5 and rating or due diligence report is published for the year