Press Release: IMF Invites Public Comment on Latest Draft Compilation Guide on Financial Soundness Indicators

April 1, 2003


The International Monetary Fund's Statistics Department has opened for public comment through June 20, 2003 the latest draft Compilation Guide on Financial Soundness Indicators, which has been prepared for the purpose of supporting countries in their efforts to develop stronger and more effective financial sectors.

Financial Soundness Indicators have been developed to complement other initiatives underway to strengthen the global financial system, including the joint IMF-World Bank Financial Sector Assessment Program that was launched in 1999.

The Guide provides guidance to the IMF's 184-member countries on the concepts and definitions, data sources, and techniques, for compiling and disseminating a list of "core" and "encouraged" Financial Soundness Indicators (see Annex). The Guide also defines the types of financial institutions; sets out detailed accounting rules, including valuation of instruments, and provides conceptual advice on individual line items in the income and expense and balance sheet accounts that can be used to calculate many of the Indicators.

Experts from international statistical organizations, standards setting bodies, and IMF member countries, commented on an earlier draft of the Guide, which also explains approaches to the aggregation and consolidation of data, gives practical advice on compiling and analyzing peer group data, and provides guidance on measuring real estate prices and certain financial market information.

Comments on the latest draft Guide may be sent to the IMF's Statistics Department via email: staf2fsi@imf.org, or by facsimile: [1] 202-623-5411. Written comments may be addressed to: Director, Statistics Department, International Monetary Fund, 700 19th Street NW, Washington DC 20431.



ANNEX

Financial Soundness Indicators: The Core and Encouraged Sets

Core Set

Deposit-takers

  

    Capital adequacy

Regulatory capital to risk-weighted assets
Regulatory Tier I capital to risk-weighted assets

    Asset quality

Nonperforming loans to total gross loans
Nonperforming loans net of provisions to capital
Sectoral distribution of loans to total loans
Large exposures to capital

    Earnings and profitability

Return on assets
Return on equity
Interest margin to gross income
Noninterest expenses to gross income

    Liquidity

Liquid assets to total assets (liquid asset ratio)
Liquid assets to short-term liabilities

    Sensitivity to market risk

Duration of assets
Duration of liabilities
Net open position in foreign exchange to capital

Encouraged Set

Deposit-takers

Capital to assets
Geographical distribution of loans to total loans
Gross asset position in financial derivatives to capital
Gross liability position in financial derivatives to capital
Trading income to total income
Personnel expenses to noninterest expenses
Spread between reference lending and deposit rates
Spread between highest and lowest interbank rate
Customer deposits to total (non-interbank) loans
Foreign currency-denominated loans to total loans
Foreign currency-denominated liabilities to total liabilities
Net open position in equities to capital

Other financial corporations

Assets to total financial system assets
Assets to GDP

Nonfinancial corporate sector

Total debt to equity
Return on equity
Earnings to interest and principal expenses
Net foreign exchange exposure to equity
Number of applications for protection from creditors

Households

Household debt to GDP

Household debt service and principal payments to income

Market liquidity

Average bid-ask spread in the securities market 1/
Average daily turnover ratio in the securities market 1/

Real estate markets

Real estate prices
Residential real estate loans to total loans
Commercial real estate loans to total loans

1/ Or in other markets that are most relevant to bank liquidity, such as foreign exchange markets.





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