## Section I. Detailed Technical Assessment and Recommendations

## Source details

**Canonical URL:** [Section I. Detailed Technical Assessment and Recommendations](https://www.imf.org/-/media/files/publications/tar/2024/english/tarea2024008.pdf)

## Other formats

- [Markdown version](/-/media/files/publications/tar/2024/english/tarea2024008.pdf.md)
- [Structured JSON version](/-/media/files/publications/tar/2024/english/tarea2024008.pdf.json)

---

### A. Action Plan — Priority Actions and Milestones
- Completed actions:
  - Reported to STA FSI-SRs for DTs (income and expense statement, balance sheet, memorandum series from 2009 onwards), FSIC, and FSM. Target Completion Date: June 2023 (Completed).
  - Started regular reporting to STA for DTs: FSI-SRs (quarterly), FSIC (annually), FSM (metadata) through ICS with data from 2009 Q1 onwards. Target Completion Date: July 2023 (Completed).
  - Started using revised bridge tables to compile FSIs for DTs consistent with the 2019 FSIs Guide. Target Completion Date: May 2023 (Completed).
  - Realigned definition of customer deposits to cover deposits from residents and nonresidents, except those placed by (resident and nonresident) financial corporations, central governments, and central bank. Target Completion Date: May 2023 (Completed).
  - Compiled new FSIs on provision to NPLs, credit to private sector, and loans concentration by economic activity. Target Completion Date: May 2023 (Completed).
  - Compiled spread between reference lending and deposit rate. Target Completion Date: May 2023 (Completed).
  - Realigned calculation of return on assets to net profit before tax. Target Completion Date: May 2023 (Completed).
  - Liquid assets: included tradable short-term debt securities. Target Completion Date: May 2023 (Completed).
  - Realigned net open position in foreign currency calculations by including positions in rand. Target Completion Date: May 2023 (Completed).
  - Re-mapped management fees from personnel costs to other expenses. Target Completion Date: May 2023 (Completed).
  - ‘Provision on bad debts’ to include both provision for loan losses and provision other losses; documented lack of breakdown in metadata. Target Completion Date: May 2023 (Completed).
  - Compiled five additional FSIs for ICs (one relating to size of OFC subsector (ICs)), effective from March 2020 data, for dissemination. Target Completion Date: September 2023 (Completed).
- Outstanding / medium-priority actions:
  - Align definition of large exposure to 2019 FSIs Guide: sum of all credit exposures to a single or group of connected borrowers which are 10 per cent or more of Tier 1 capital. If not, document deviation in metadata. Target Completion Date: June 2024.
  - Short-term liabilities: include deposit liabilities of 3 months or less; if not, document deviation from 2019 FSIs Guide. Target Completion Date: June 2024.
  - Provision on bad debts: ensure both provision for loan losses and provision other losses are explicitly included (Completed but document breakdown if absent).

### B. Background — Mission Scope and Outputs
- Mission details:
  - Remote TA mission: April 27–May 04, 2023, requested by Central Bank of Lesotho (CBL), supported by AFR.
  - Objectives:
    - Assist CBL in compiling FSIs using new FSI report forms consistent with the IMF’s 2019 FSIs Compilation Guide.
    - Review source data, institutional coverage, accounting and regulatory frameworks for FSIs for DTs and ICs.
    - Agree work plan to compile and report FSIs to STA in new FSI report forms.
- Outputs achieved:
  - Compiled two new core and one additional FSI for DTs, and five additional FSIs for ICs (one on size of OFC subsector (ICs)) for IMF reporting.
  - Aligned several FSI definitions for DTs to 2019 FSIs Guide.
  - Updated bridge tables for DTs; developed bridge tables for ICs mapping income/expense statements, balance sheets, memorandum/supervisory series to new FSI templates.
  - Assisted filling new metadata and institutional coverage forms (FSM and FSIC).
  - Agreed timeframe for reporting FSIs to STA; FSM and FSIC finalized in June 2023; DT FSIs disseminated on IMF FSIs website in July 2023; new OFCs/ICs FSIs reportable by end-September 2023.

### C. Overview of the Financial System in Lesotho — Structure and Shares
- Supervisory perimeter:
  - CBL supervises banks, ICs, pension funds, microfinance institutions, collective investment schemes, and large SACCOs whose total assets exceed the threshold of 5 million Loti.
- System shares and counts (from TABLE 2):
  - Deposit Takers: Number of Institutions: 72; Total Assets (Million, Loti): 20,014; Share in Total Assets (in percent): 47%
  - Commercial banks: Number of Institutions: 4; Total Assets (Million, Loti): 19,843; Share in Total Assets (in percent): 46.2%
    - o/w domestic controlled: 1; Total Assets (Million, Loti): 2,094; Share in Total Assets (in percent): 4.9%
    - o/w foreign controlled: 3; Total Assets (Million, Loti): 17,748; Share in Total Assets (in percent): 41.3%
  - Savings and credit cooperatives: Number of Institutions: 68; Total Assets (Million, Loti): 171; Share in Total Assets (in percent): <1 %
  - Other Financial Corporations: Number of Institutions: 145; Total Assets (Million, Loti): 22,929; Share in Total Assets (in percent): 53%
  - Insurance: Number of Institutions: 10; Total Assets (Million, Loti): 9,405; Share in Total Assets (in percent): 21.9%
    - o/w life insurance: 6; Total Assets (Million, Loti): 8,622; Share in Total Assets (in percent): 20.1%
    - o/w nonlife insurance: 4; Total Assets (Million, Loti): 783; Share in Total Assets (in percent): 1.8%
  - Pension funds: Number of Institutions: 7; Total Assets (Million, Loti): 9,374; Share in Total Assets (in percent): 21.8%
  - Money market funds: Number of Institutions: 1; Total Assets (Million, Loti): 774; Share in Total Assets (in percent): 1.8%
  - Non-Money Market Funds: Number of Institutions: 3; Total Assets (Million, Loti): 2,210; Share in Total Assets (in percent): 5.1%
  - Non-DT microfinance institutions: Number of Institutions: 132; Total Assets (Million, Loti): 1,166; Share in Total Assets (in percent): 2.7%
  - Total: Number of Institutions: 217; Total Assets (Million, Loti): 42,943; Share in Total Assets (in percent): 100%
- Notes:
  - Pension Fund Bill (2019) gave CBL supervisory authority; CBL registered and received data from only six private PFs to date.
  - Banking sector: four banks (one domestically controlled, three foreign-owned); three foreign-owned banks hold around 41 percent of banking sector assets and have no resident/nonresident subsidiaries or nonresident branches.
  - 68 SACCOs are domestically controlled; combined assets represent less than one percent of DT subsector; one large SACCO under CBL supervision since November 2022.

### D. Institutional Coverage and Consolidation Basis — Current Practice
- Consolidation bases:
  - DTs: Domestic Location (DL) consolidation basis.
  - OFCs (including ICs): Aggregate Resident Based Approach (ARBA).
- Institutional coverage specifics:
  - DL covers resident DTs and their resident branches in same sector; adequate as DTs have no cross-border or cross-sector activities.
  - DT institutional coverage: three foreign-controlled banks and one domestically controlled bank, all domestically incorporated; SACCOs excluded from FSI coverage.
  - ICs: ARBA aggregates income/expense statements, balance sheets, memorandum series; no intragroup adjustments (life/nonlife separation required by law).

### E. Accounting and Regulatory Frameworks Underlying the FSI Data — Summary
- Accounting and regulatory frameworks:
  - Broad consistency with Basel I and IFRS/IAS.
  - Capital adequacy ratios and RWAs mainly follow Basel I.
  - Commercial banks adopted IFRS9 since 2018 for valuation of financial instruments; mix of supervisory method and IFRS9 expected credit loss model used for provisioning.
  - NPL definitions broadly consistent with 2019 FSIs Guide and interest is not accrued on NPLs.
- Detailed points:
  - Under IFRS9 financial instruments may be valued at: amortized cost, fair value through other comprehensive income (FVOCI), fair value through profit and loss (FVTPL).
  - Realized and unrealized gains/losses from revaluation of financial instruments denominated in foreign currencies are valued at FVTPL for banks; for insurance corporations realized and unrealized gains/losses on investments in financial instruments are valued at FVTPL.
  - Tier 1 capital composition preserved exactly as listed in regulations.
  - Minimum total capital adequacy ratio is currently at 8.0 percent. A higher minimum may be required for an individual bank (e.g., bank less than 3 years old).
  - Risk-Weighted coefficients for credit exposures preserved as listed (0, 20, 50, 100 categories).

### F. Source Data, Compilation Framework, and Metadata
- Source data adequacy:
  - Source data for DTs and ICs adequate and meet 2019 FSIs Guide criteria for publication.
  - Source data cover income and expense statements, balance sheets, memorandum series, and supervisory series collected monthly/quarterly.
- Bridge tables and compilation:
  - Existing DT bridge tables updated; new IC bridge tables developed to map source statements to FSI templates.
  - Compilation spreadsheets including bridge tables provided to CBL staff.
  - Current aggregation by CBL staff is manual from call reports; automation recommended to reduce manual interventions.
  - Mission expanded FSIs reported to STA: 14 core and ten additional FSIs for DTs, and five additional FSIs for ICs (one for OFC subsector (ICs)); all to be compiled and reported quarterly.
- Prudential reports used (preserved names and periodicity):
  - DTs: MFS. Balance sheet (Monthly) from MFS (New serialized MBS) (2013Q3 onwards)
  - DTs: SD 001. Monthly Banking Statistics (Monthly) (Prior to 2013Q3)
  - DTs: MFS. Balance sheet from MFS (Monthly, old, serialized MBS) (Prior to 2013Q3)
  - DTs: SD 001AA1001. Loans and advances (Monthly)
  - DTs: SD 002. Income Statement (Quarterly)
  - DTs: SD 011. Capital adequacy (Quarterly)
  - DTs: SD LS-SD011CK3001. Total qualifying capital (Quarterly)
  - DTs: SD 012. Exposure to Top 20 Borrowers (Quarterly)
  - ICs: FG 20. Income statement - General Insurance (Quarterly)
  - ICs: FG 10. Balance sheet - General insurance (Quarterly)
  - ICs: FL 20. Income statement - Life Insurance (Quarterly)
  - ICs: FL 1. Balance sheet- Life insurance (Quarterly)
- Metadata:
  - Mission assisted in completing FSM and FSIC; contents of Tables 2 and 3 agreed and consistent with 2019 FSIs Guide.
  - Metadata to be disseminated with FSI data to facilitate interpretation (definitions, consolidation methods, supervisory and accounting rules, institutional coverage, source data).

### G. Key Findings and Recommendations
- Mission outcomes (summary):
  - Remote TA mission conducted April 27–May 04, 2023 to assist CBL with FSI compilation and alignment to 2019 FSIs Guide.
  - Before mission, CBL compiled 11 core and eight additional FSIs for DTs not aligned with 2019 Guide; mission compiled two new core and one additional FSI for DTs and five additional FSIs for ICs for IMF reporting.
  - Bridge tables updated/developed; source data generally adequate for publication.
  - Regulatory/accounting frameworks broadly consistent with Basel I and IFRS/IAS; banks adopted IFRS9 in 2018; provisioning uses mixture of supervisory method and IFRS9 expected credit loss model; NPL definitions broadly consistent and interest not accrued on NPLs.
  - CBL compiles FSIs for DTs using DL basis; OFCs subsector compiled using ARBA; DT institutional coverage geared towards commercial banks only; IC coverage includes six life and four nonlife ICs.
  - Improvements recommended: realign definition of large exposures and short-term liabilities to 2019 FSIs Guide; include rand positions in net open position in foreign currency, foreign currency denominated loans, and foreign currency liabilities (reiterating 2014 mission recommendation).
  - Metadata (FSM and FSIC) completed; CBL started reporting DT FSIs using bridge tables and finalized FSM and FSIC in June 2023; dissemination on IMF FSIs website in July 2023. Newly compiled FSIs on size of OFCs and ICs can be reported by end-September 2023.
- Specific methodological recommendations (selected and preserved exactly where numeric/dates specified):
  - Realign definition of customer deposits to exclude deposits placed by financial corporations, central governments, and central bank.
  - Include tradable short-term debt securities in liquid assets.
  - Calculate return on assets using net profit before tax (per 2019 FSIs Guide).
  - Include deposit liabilities of 3 months or less in short-term liabilities (or document deviation).
  - Include positions in rand in calculations of net open position in foreign currency, foreign currency denominated loans, and foreign currency liabilities.
  - Align large exposure definition to exposures ≥ 10 per cent of Tier 1 capital or document deviation.
  - Align the definition of large exposure to the 2019 FSIs guide from loans to top 20 borrowers to sum of all credit exposures to single or group of connected borrowers which are 10 per cent or more of Tier 1 capital by June 2024. If not document in the metadata the deviation from the 2019 FSIs Guide until revision in the definition.
  - Short-term liabilities: include deposit liabilities of 3 month or less. If not, document in the metadata the deviation from the 2019 FSIs Guide.
  - The CBL to start compiling five additional FSIs for ICs of which one relates to the size of the OFC sub-sector (ICs), effective from March 2020 data for dissemination in the FSIs website by September 2023.

### H. FSI Reporting, Metadata, Training, and Contacts
- FSI reporting and alignment:
  - CBL started reporting FSIs for DTs to STA for dissemination in June 2023.
  - Recommendation to align existing FSI definitions with the 2019 FSIs Guide to facilitate compilation and dissemination.
- Metadata updates and publication:
  - Contents of new Tables 2 and 3 of metadata updated; CBL started reporting metadata to STA in July 2023.
  - Published metadata provides information on banking sector structure and national accounting/regulatory frameworks.
- Resources, training, and technical cooperation:
  - CBL staff encouraged to attend IMF regional and HQ training on financial sector statistics; recommended participation in STA training at IMF HQ once every two years and regional centers.
- CBL officials met (selected):
  - Ms. Puseletso Tau — Director, Banking Supervision and Financial Stability Department
  - Mr. Nkhahle Seeiso — Head, Financial Stability Division
  - Mr. Refiloe Tsephe — Section Head, Macroprudential Policy, Research and Analysis
  - Mr. Ntsane Moliko — Section Head, Macro-Regulatory Environment and Resolution Planning

### I. Selected FSI Values (2022 Q1–2022 Q4) — Core and Additional FSIs (selected)
- Core FSIs (quarterly values preserved in sequence):
  - Regulatory capital to risk-weighted assets: 27.0, 23.9, 23.4, 24.0
  - Tier 1 capital to risk-weighted assets: 29.0, 25.7, 25.1, 25.6
  - Nonperforming loans net of provisions to capital: 6.9, 8.1, 6.7, 6.0
  - Tier 1 capital to assets: 13.5, 12.4, 12.0, 12.5
  - Nonperforming loans to total gross loans: 4.4, 4.6, 4.4, 4.3
  - Loan concentration by economic activity: 62.1, 64.1, 69.0, 66.2
  - Provisions to nonperforming loans: 49.9, 49.7, 57.7, 61.2
  - Return on assets: 2.5, 2.2, 2.1, 2.5
  - Return on equity: 12.8, 10.6, 10.4, 12.5
  - Interest margin to gross income: 55.4, 55.8, 56.1, 56.3
  - Noninterest expenses to gross income: 70.2, 72.2, 72.2, 69.2
  - Liquid assets to total assets: 26.4, 25.2, 22.6, 20.6
  - Liquid assets to short-term liabilities: 38.5, 36.9, 33.2, 30.3
  - Net open position in foreign exchange to capital: 251.6, 272.7, 263.8, 232.5
- Additional FSIs (selected quarterly values preserved):
  - Large exposures to capital: 56.2, 66.8, 69.4, 66.8
  - Gross asset position in financial derivatives to capital: 2.8, 0.6, 0.1, 1.8
  - Gross liability position in financial derivatives to capital: 0.3, 3.0, 3.4, 0.8
  - Trading income to total income: 4.6, 4.6, 4.6, 5.0
  - Personnel expenses to noninterest expenses: 40.1, 40.6, 40.8, 40.8
  - Spread between reference lending and deposit rates (bp): 1,191.5, 1,113.5, 1,105.8, 1,130.7
  - Customer deposits to total (non-interbank) loans: 161.4, 153.8, 157.9, 153.9
  - Foreign-currency-denominated loans to total loans: 0.0, 0.0, 0.0, 0.0
  - Foreign-currency-denominated liabilities to total liabilities: 25.2, 24.9, 23.9, 38.3
  - Credit growth to private sector: 7.3, 7.8, 5.0, 5.1
- Insurance FSIs (2022 Q1–2022 Q4) selected quarterly values:
  - OFCs' assets to gross domestic product: Insurance Corporations: 21.8, 21.3, 21.4, 22.5
  - Shareholder equity to total invested assets (Life insurance only): 15.5, 13.3, 14.8, 13.8
  - Shareholder equity to total invested assets (Nonlife insurance only): 39.0, 38.3, 37.4, 32.7
  - Shareholder equity to total invested assets (Life insurance & nonlife insurance): 16.5, 14.3, 15.8, 14.7
  - Combined ratio (Nonlife insurance only): 74.3, 80.1, 77.2, 79.6
  - Return on assets (Life insurance only): 9.8, 5.7, 4.9, 4.7
  - Return on equity (Life insurance): 72.4, 42.6, 35.1, 32.9
  - Return on equity (Nonlife insurance): -48.6, -27.1, -21.6, -13.5
  - Return on equity (Life insurance & nonlife insurance): 59.2, 34.9, 28.8, 27.8

*Source: tarea2024008 - Section I. Detailed Technical Assessment and Recommendations*

### Section I. Detailed Technical Assessment and Recommendations .................................................. 7

### Section I. Detailed Technical Assessment and Recommendations

### A. Action Plan — Priority Actions and Milestones
- PR: Report to STA for review the FSI sectoral financial statements (FSI-SRs) for DTs, including income and expense statement, balance sheet, and memorandum series from 2009 onwards, the new FSI institutional coverage (FSIC), and the new FSI metadata (FSM). Target Completion Date: June 2023 (Completed).
- PR: Start regular reporting to STA for DTs, FSI-SRs (on a quarterly basis), FSIC (annually) and FSM (metadata) through the Integrated Collection System (ICS) for disseminating on the IMF’s FSIs website with data from 2009 Q1 onwards. Target Completion Date: July 2023 (Completed).
- H: Start using the revised bridge tables developed by the mission to compile the FSIs for DTs which are consistent with the 2019 FSIs Guide. Target Completion Date: May 2023 (Completed).
- M: Align the definition of large exposure to the 2019 FSI Guide from loans to top 20 borrowers to sum of all credit exposures to a single or group of connected borrowers which are 10 per cent or more of Tier 1 capital. If not, document in the metadata the deviation from the 2019 FSIs Guide until the definition is revised. Target Completion Date: June 2024.
- H: Realign the definition of customer deposits to cover deposits from residents and nonresidents, except those placed by (resident and nonresident) financial corporations, central governments, and central bank. Target Completion Date: May 2023 (Completed).
- H: Compile new FSIs on provision to NPLs, credit to private sector, and loans concentration by economic activity. Target Completion Date: May 2023 (Completed).
- H: Compile the spread between reference lending and deposit rate. Target Completion Date: May 2023 (Completed).
- H: Realign the calculation of return on assets to the definition of the 2019 FSIs Guide by taking the net profit before tax instead of after tax. Target Completion Date: May 2023 (Completed).
- H: Liquid assets: include tradable short-term debt securities that can easily be converted into cash. Target Completion Date: May 2023 (Completed).
- M: Short-term liabilities: include deposit liabilities of 3 months or less. If not, document in the metadata the deviation from the 2019 FSI Guide. Target Completion Date: June 2024.
- H: Realign the calculation of net open position in foreign currency, foreign currency denominated loans and foreign currency liabilities to the 2019 FSIs Guide by including the positions in rand. Target Completion Date: May 2023 (Completed).
- H: Re-map management fees from personnel costs to other expenses in the income and expense statement. Target Completion Date: May 2023 (Completed).
- M: ‘Provision on bad debts’ in the income and expense statement include both provision for loan losses and provision other losses. Document this lack of breakdown in metadata. Target Completion Date: May 2023 (Completed).
- M: Compile five additional FSIs for ICs of which one relates to the size of the OFC subsector (ICs), effective from March 2020 data, for dissemination in the FSIs website. Target Completion Date: September 2023 (Completed).

### B. Background — Mission Scope and Outputs
- The Statistics Department (STA) conducted a remote TA mission on compilation of FSIs during April 27–May 04, 2023 at the request of the Central Bank of Lesotho (CBL), supported by IMF’s African Department (AFR).
- Mission objectives:
  - Assist CBL staff in compiling FSIs using the new FSIs report forms consistent with the IMF’s 2019 FSIs Compilation Guide (2019 FSIs Guide).
  - Review available source data, institutional coverage, and accounting and regulatory frameworks used in production of FSIs for deposit takers (DTs) and insurance corporations (ICs).
  - Agree with CBL officials on a work plan to compile and report FSIs to STA in the new FSI report forms.
- Outputs achieved:
  - Compiled two new core and one additional FSI for DTs, and five additional FSIs for ICs (one relates to the size of the OFC subsector (ICs)) for reporting to the IMF.
  - Aligned definitions of several FSIs for DTs to ensure consistency with the 2019 FSIs Guide.
  - Updated bridge tables for DTs and developed new bridge tables for ICs mapping income/expense statements, balance sheets, and memorandum/supervisory series to the new FSI templates.
  - Assisted filling in new metadata and institutional coverage report forms (FSM and FSIC).
  - Agreed timeframe for reporting FSIs to STA; CBL finalized FSM and FSIC in June 2023 and disseminated FSIs for DTs on the IMF FSIs website in July 2023. Newly compiled FSIs on the size of OFCs and ICs can be reported by end-September 2023 for dissemination.

### C. Overview of the Financial System in Lesotho — Structure and Shares
- The CBL supervises banks, ICs, pension funds, microfinance institutions, collective investment schemes, and large SACCOs whose total assets exceed the threshold of 5 million Loti.
- DTs account for approximately 47 percent of total financial system assets.
- OFCs subsector holds approximately 53 percent of total financial system assets; insurance corporations (ICs) and pension funds (PFs) together constitute around 44 percent of the total financial system.
- Key sector composition and asset shares (from TABLE 2: The Financial Sector):
  - Deposit Takers: Number of Institutions: 72; Total Assets (Million, Loti): 20,014; Share in Total Assets (in percent): 47%
  - Commercial banks: Number of Institutions: 4; Total Assets (Million, Loti): 19,843; Share in Total Assets (in percent): 46.2%
    - o/w domestic controlled: 1; Total Assets (Million, Loti): 2,094; Share in Total Assets (in percent): 4.9%
    - o/w foreign controlled: 3; Total Assets (Million, Loti): 17,748; Share in Total Assets (in percent): 41.3%
  - Savings and credit cooperatives: Number of Institutions: 68; Total Assets (Million, Loti): 171; Share in Total Assets (in percent): <1 %
  - Other Financial Corporations: Number of Institutions: 145; Total Assets (Million, Loti): 22,929; Share in Total Assets (in percent): 53%
  - Insurance: Number of Institutions: 10; Total Assets (Million, Loti): 9,405; Share in Total Assets (in percent): 21.9%
    - o/w life insurance: 6; Total Assets (Million, Loti): 8,622; Share in Total Assets (in percent): 20.1%
    - o/w nonlife insurance: 4; Total Assets (Million, Loti): 783; Share in Total Assets (in percent): 1.8%
  - Pension funds: Number of Institutions: 7; Total Assets (Million, Loti): 9,374; Share in Total Assets (in percent): 21.8%
  - Money market funds: Number of Institutions: 1; Total Assets (Million, Loti): 774; Share in Total Assets (in percent): 1.8%
  - Non-Money Market Funds: Number of Institutions: 3; Total Assets (Million, Loti): 2,210; Share in Total Assets (in percent): 5.1%
  - Non-DT microfinance institutions: Number of Institutions: 132; Total Assets (Million, Loti): 1,166; Share in Total Assets (in percent): 2.7%
  - Total: Number of Institutions: 217; Total Assets (Million, Loti): 42,943; Share in Total Assets (in percent): 100%
- Notes:
  - The Pension Fund Bill was promulgated in 2019, giving the CBL supervisory authority over the subsector. So far, the CBL has registered and received data from only six private PFs.
  - The banking sector comprises four banks: one domestically controlled and three foreign-owned; the three foreign-owned banks hold around 41 percent of the total assets of the banking sector and have no resident or nonresident subsidiaries or nonresident branches.
  - There are 68 SACCOs, all domestically controlled and incorporated; combined assets represent less than one percent of the DTs subsector. Since November 2022, one large SACCO (Boliba Multi-purpose Cooperative) is under CBL supervision; others remain supervised by the Ministry of Small Business Development, Cooperatives and Marketing. Prudential requirements for large SACCOs differ from banks and they do not report data to CBL yet.

### D. Institutional Coverage and Consolidation Basis — Current Practice
- Consolidation bases used:
  - DTs: Domestic Location (DL) consolidation basis.
  - OFCs (including ICs): Aggregate Resident Based Approach (ARBA).
- Institutional coverage details:
  - DL covers resident DTs and their resident branches in the same sector. DL provides adequate coverage for DTs since none of the DTs operating in Lesotho have cross-border or cross-sector activities.
  - Institutional coverage for DTs comprises three foreign-controlled banks and one domestically controlled bank, all domestically incorporated. SACCOs are excluded from FSI coverage because they do not have the same capital and prudential requirements.
  - For ICs, ARBA consists of simple aggregation of income and expense statements, balance sheets, and memorandum series of ICs. No intragroup adjustments are done since insurance laws require ICs to conduct life and nonlife activities in separate units.

### E. Accounting and Regulatory Frameworks Underlying the FSI Data — Summary
- Regulatory and accounting frameworks:
  - Broad consistency with Basel I and International Financial Reporting Standards/International Accounting Standards (IFRS/IAS), respectively.
  - Capital adequacy ratios and risk weighted assets of banks follow mainly the Basel I framework.
  - Commercial banks in Lesotho adopted IFRS9 since 2018 for valuation of financial instruments and rely on a mixture of supervisory method and IFRS9’s expected credit loss model to calculate minimum provisioning requirements.
  - Definitions of nonperforming loans (NPLs) are broadly consistent with the 2019 FSIs Guide and interest is not accrued on NPLs.

### F. Source Data, Compilation Framework, and Metadata
- Source data for compiling FSIs for DTs and ICs are adequate and generally meet the criteria established by the 2019 FSIs Guide for publication on the IMF website.
- Bridge tables:
  - Existing bridge tables for DTs were updated; new bridge tables were developed for ICs to ensure mapping from source statements to the new FSI templates and to facilitate consistency and adoption of new report forms.
- Metadata and institutional coverage:
  - Mission assisted to complete FSM and FSIC forms. Contents of new Tables 2 and 3 of the metadata were discussed and agreed with CBL staff and are consistent with the 2019 FSIs Guide requirements.
  - Publication of metadata provides additional information on banking sector structure and accounting/regulatory frameworks underpinning FSIs.

### G. Key Findings and Recommendations
- Mission outcomes (summary):
  1. Remote TA mission conducted April 27–May 04, 2023 to assist CBL with FSI compilation and alignment to 2019 FSIs Guide.
  2. Prior to mission, CBL compiled 11 core and eight additional FSIs for DTs not aligned with 2019 Guide. Mission compiled two new core and one additional FSI for DTs and five additional FSIs for ICs for IMF reporting.
  3. Bridge tables were updated/developed to map source data to FSI templates; source data are generally adequate for publication.
  4. Regulatory/accounting frameworks broadly consistent with Basel I and IFRS/IAS; banks adopted IFRS9 in 2018; provisioning uses mixture of supervisory method and IFRS9 expected credit loss model; NPL definitions broadly consistent and interest not accrued on NPLs.
  5. CBL compiles FSIs for DTs using DL basis; OFCs subsector compiled using ARBA; DT institutional coverage geared towards commercial banks only; IC coverage includes six life and four nonlife ICs.
  6. Improvements recommended: realign definition of large exposures and short-term liabilities to 2019 FSIs Guide; include rand positions in net open position in foreign currency, foreign currency denominated loans, and foreign currency liabilities (reiterating 2014 mission recommendation).
  7. New metadata and institutional coverage report forms (FSM and FSIC) were completed; contents of metadata tables 2 and 3 agreed and consistent with 2019 FSIs Guide.
  8. Timeframe agreed for reporting FSIs to STA; CBL started reporting DT FSIs using bridge tables and finalized FSM and FSIC in June 2023 for STA review; dissemination on IMF FSIs website in July 2023. Newly compiled FSIs on size of OFCs and ICs can be reported by end-September 2023.
  9. Detailed action plan prepared; priority recommendations summarized in Table 1 and detailed technical assessment provides further recommendations and milestones.

- Specific methodological recommendations (selected from Action Plan):
  - Realign definition of customer deposits to exclude deposits placed by financial corporations, central governments, and central bank.
  - Include tradable short-term debt securities in liquid assets.
  - Calculate return on assets using net profit before tax (per 2019 FSIs Guide).
  - Include deposit liabilities of 3 months or less in short-term liabilities (or document deviation).
  - Include positions in rand in calculations of net open position in foreign currency, foreign currency denominated loans, and foreign currency liabilities.
  - Align large exposure definition to exposures ≥ 10 per cent of Tier 1 capital or document deviation.

*Source: tarea2024008 - Section I. Detailed Technical Assessment and Recommendations*

### 17. Currently there are no DTs in receivership/liquidation in Lesotho. The 2019 FSIs Guide

### 17. Currently there are no DTs in receivership/liquidation in Lesotho. The 2019 FSIs Guide

### E. ACCOUNTING AND REGULATORY FRAMEWORKS UNDERLYING THE FSI DATA
- Commercial banks adopted IFRS9 since 2018. Prior to IFRS9, IAS39 was used for valuation of financial instruments.
- Under IFRS9, financial instruments may be valued at:
  - amortized cost,
  - fair value through other comprehensive income (FVOCI),
  - fair value through profit and loss (FVTPL).
- Expected credit loss model adopted; supervisory method also used to calculate loan loss provisioning requirements.
- Realized and unrealized gains/losses from revaluation of financial instruments denominated in foreign currencies are valued at FVTPL for banks.
- For insurance corporations, realized and unrealized gains/losses on investments in financial instruments are valued at FVTPL.

- Regulatory framework for capital adequacy ratios follows mainly Basel I Capital Accord.
  - Components of regulatory capital and RWAs defined in the CBL’s Financial Institutions Regulations 2016 on capital adequacy.
  - Tier 1 capital comprises: ordinary shares, ordinary share premium, undisclosed reserves, perpetual non-cumulative preference shares and preference share premium, statutory reserve, capital reserves-excluding asset revaluation, general reserves- excluding reserves for losses on assets, audited retained earnings after application of supervisory deductions for current year losses (whether audited or not), and goodwill.
  - Tier 2 capital consists of: fixed assets revaluation reserves, securities revaluation reserves, undisclosed reserves, general provisions for losses on specific assets that are not eligible for inclusion in capital (up to 1.25% of weighted-risk assets), perpetual cumulative and long-term preference shares, perpetual debt instruments, mandatory convertible debt instruments, subordinate term debt, and limited life preference shares.
  - Total regulatory capital = Tier 1 capital + Tier 2 capital after application of all deductions (e.g., investment in unconsolidated financial subsidiaries, intangible assets, deficiencies in provisions for losses, and other deductions determined by the central bank).
  - RWAs calculated mostly using Basel I’s standardized approach for credit and market risk. Off-balance sheet credit exposures converted into credit equivalent amounts by multiplying nominal amounts with credit conversion factors ranging from 0–100 percent before risk weights are applied. Market risk comprises foreign exchange risk, commodities risk, interest rate risk, and equity risk with respective risk weights.

- Basel I framework applied uniformly to all commercial banks and not applicable to SACCOs.
- Minimum total capital adequacy ratio is currently at 8.0 percent. A higher minimum may be required for an individual bank (e.g., bank less than 3 years old).

- Summary of Risk-Weighted Coefficients for Credit Exposures (selected entries preserved exactly as presented):
  - Cash, balances due from the CBL; claims on or securities issued or guaranteed by Lesotho government; claims on local government, statutory boards and other public sector entities (guaranteed by Lesotho Government); claims on OECD and approved regional countries; and fully secured claims. — 0
  - Balances due from banks and other financial institutions licensed in Lesotho, OECD countries, approved regional countries, as well as in other countries with 1 year or less residual maturity; other claims and loans guaranteed by banks and other financial institutions licensed in Lesotho and OECD countries; Claims on or loans guaranteed by multilateral institutions or collateralized by securities issued by such institutions; Claims on or loans guaranteed by OECD and approved regional countries’ public sector entities; and Cash items in the process of collection. — 20
  - Real estate housing loans fully secured by mortgage on residential properties which are owner-occupied or rented. — 50
  - Commercial, personal, other loans and advances; balances due from banks and financial institutions licensed in other countries with residual maturity of over 1 year; claims on and obligations guaranteed by other foreign central banks and other foreign central governments; fixed assets; investments; other assets. — 100

### NPLs, PROVISIONS, AND ASSET CLASSIFICATION
- National definitions of NPLs broadly consistent with the 2019 FSIs Guide.
  - NPLs and minimum provisions defined in CBL’s Financial Institutions (Banks) (Asset Classification) Regulation, 2016.
  - NPLs defined as loans for which any portion of principal or interest is due and unpaid for 90 days or more, and interest charges for 90 days or more have gone unpaid or have not been covered by deposits refinanced or rolled over into a new loan.
  - NPLs comprise past due loans classified as substandard, doubtful, and loss; performing loans comprise loans classified as pass and special mention.
  - When loans are classified as NPLs, they are placed on non-accrual status.
- Table of Loans Classification and Minimum Provisioning Requirements (preserved exactly):
  - Pass: Number of days past due 0–29; Minimum provisions (in percent) 0
  - Special mention: 30–89; 10
  - Substandard: 90–179; 20
  - Doubtful: 180–359; 50
  - Loss: more than 360; 100

### F. SOURCE DATA
- Source data from DTs and ICs broadly adequate to compile FSIs for Lesotho.
- Source data cover: income and expense statements, balance sheets, and memorandum series collected from regulated entities on a monthly/quarterly basis (described in respective charts of accounts).
- Source data also cover supervisory series for DTs relating to capital adequacy, asset quality, earnings and profitability, liquidity, and net open positions in foreign exchange.

- Prudential reports used to calculate FSIs for DTs and ICs (reported to CBL within 20 days for monthly data and within 30 days for quarterly data after the end of the period):
  - DTs: MFS. Balance sheet (Monthly) from MFS (New serialized MBS) (2013Q3 onwards)
  - DTs: SD 001. Monthly Banking Statistics (Monthly) (Prior to 2013Q3)
  - DTs: MFS. Balance sheet from MFS (Monthly, old, serialized MBS) (Prior to 2013Q3)
  - DTs: SD 001AA1001. Loans and advances (Monthly)
  - DTs: SD 002. Income Statement (Quarterly)
  - DTs: SD 011. Capital adequacy (Quarterly)
  - DTs: SD LS-SD011CK3001. Total qualifying capital (Quarterly)
  - DTs: SD 012. Exposure to Top 20 Borrowers (Quarterly)
  - ICs: FG 20. Income statement - General Insurance (Quarterly)
  - ICs: FG 10. Balance sheet - General insurance (Quarterly)
  - ICs: FL 20. Income statement - Life Insurance (Quarterly)
  - ICs: FL 1. Balance sheet- Life insurance (Quarterly)

### G. COMPILATION FRAMEWORK
- Mission updated bridge tables to compile core and additional FSIs for DTs for transmission to STA and developed new bridge tables for additional FSIs for ICs.
  - Mapped source data to tables 5.1 DT and 5.3 ICs of the FSI-SRs and derived FSIs from underlying data in FSD sheet.
  - Bridge tables show classification of income and expense statement, balance sheet, and memorandum series items.
  - Compilation spreadsheets including bridge tables for DTs and ICs were provided to CBL staff.
  - Current aggregation by CBL staff is manual from call reports; automation recommended to reduce manual interventions.

- Mission expanded list of FSIs reported to STA:
  - 14 core and ten additional FSIs for DTs,
  - five additional FSIs for ICs (one relates to size of OFC subsector (ICs)).
  - All FSIs to be compiled and reported to STA on a quarterly basis.

- Differences noted between existing CBL FSIs (aligned with 2006 FSIs Guide) and FSIs compiled during mission (based on 2019 FSIs Guide); differences explained in Appendix III.

### DEPOSIT TAKERS — SECTORAL FINANCIAL STATEMENTS AND RECLASSIFICATIONS
- Mission updated bridge tables for DTs; several accounts reclassified in income/expense statement and sectoral balance sheet.
- Revenue and expenses in call report aligned with Annex 2 of old FS2 template, facilitating mapping to income and expenses for profitability indicators.
- Extraordinary profits/losses reclassified to other income/expenses consistent with 2019 FSIs Guide (per IAS1); past profitability indicators need restatement.
- Table 5: Reclassification of main accounts in Table 5.1 DTs (preserved entries):
  - Income and Expense Statement:
    1. Management Fees reclassified to other expenses from personal expenses
    2. Extraordinary profit/losses reclassified to other income/expenses.
  - Balance Sheet:
    3. Accumulated depreciation is to be deducted from the nonfinancial assets instead of recording in other liabilities
    4. Re-mapped the definition of customer deposits to be aligned with the 2019 FSIs Guide.
    5. Deposit liabilities from CBL, Central Government, and OFCs have been reclassified to other currency and deposits from customer deposits
    6. Specific provisions have been reclassified from other liabilities and deducted from gross loans.
    7. General provision and provision for other losses have been reclassified in General and other provisions from other liabilities.

- Composition of customer deposits revised from 2009 Q1 onwards to align with 2019 FSIs Guide.
  - Customer deposits concept excludes resident and nonresident deposits from central banks and central governments; excludes deposits from state and local governments (footnote).
  - Mission reclassified transferable deposit and other deposits from resident and nonresident central banks, central government, and OFCs from customer deposits to other deposits and currency.
  - Non-interbank loans consist of loans to resident and nonresident sectors other than other depository corporations.

### MEMORANDUM AND SUPERVISORY SERIES
- Large exposures currently compiled using national definition (loans to top 20 borrowers). 2019 FSIs Guide defines large exposures as sum of all credit exposures to a single or group of connected borrowers which are 10 percent or more of Tier 1 capital.
  - Recommendation to change definition from loans to top 20 borrowers to sum of all credit exposures to single or group counterparts which are 10 percent or more of Tier 1 capital; deviation must be explained in metadata.

- Components of liquid assets updated:
  - Previously CBL compiled core measure of liquid assets (cash and transferable deposits only).
  - 2019 FSIs Guide recommends including all securities that are actively traded.
  - Mission re-mapped CBL securities in liquid assets in bridge table as they are actively traded.

- Definition of short-term liabilities not in line with 2019 FSIs Guide:
  - CBL compiles short-term liabilities as deposit liabilities maturing within one year.
  - Mission recommended including government deposits and nonresident deposits if short-term maturity of 3 months or less; documented deviation in metadata.

- Foreign currency positions initially excluded rand (ZAR); mission integrated positions in rand into foreign currency loans, foreign currency liabilities, and net open position in foreign exchange.
  - Rationale: Lesotho is member of CMA; rand co-circulates with Lesotho Loti; rand issued by South Africa’s monetary authority and considered foreign currency per 2019 FSIs Guide.
  - Mission assisted compilers to integrate rand positions; approach also recommended by 2014 FSI mission.

- Spread on reference lending and deposit rates:
  - Reference lending rates recalculated using weighted averages: interest income (loan) divided by non-interbank gross loans.
  - Deposit rates calculated as interest expense divided by customer deposits, consistent with second approach recommended by 2019 FSIs Guide.

- Mission compiled two newly introduced core and one additional FSIs for DTs for reporting to STA (source data available from call reports, consistent with 2019 FSIs Guide):
  - Provisions to NPLs: coverage ratio (new core FSI) = specific provisions divided by total NPLs.
  - Loan concentration by economic activity (new core FSI) — replaces previous core FSI on sectoral distribution of loans; measures credit concentration risk in three top subsectors of nonfinancial corporations; based on ISIC Rev.4.
  - Credit growth to the private sector (new additional FSI) — yearly growth rate of credit to private nonfinancial corporations and households and non-profit institutions serving households (NPISH).

- Current composition of credit to private sector: loans extended by DTs to private nonfinancial corporations, households, and NPISHs only (nonfinancial corporations do not issue debt securities).

Recommendations (preserved exactly where numeric/dates specified):
- Align the definition of large exposure to the 2019 FSIs guide from loans to top 20 borrowers to sum of all credit exposures to single or group of connected borrowers which are 10 per cent or more of Tier 1 capital by June 2024. If not document in the metadata the deviation from the 2019 FSIs Guide until revision in the definition.
- Short-term liabilities: include deposit liabilities of 3 month or less. If not, document in the metadata the deviation from the 2019 FSIs Guide.

### INSURANCE CORPORATIONS
- Mission compiled five additional FSIs for ICs (one relates to size of OFC subsector (ICs)) for reporting to STA on a quarterly basis.
- ICs cover six LICs and four NLICs. No composite ICs in Lesotho; insurance laws require separate financial statements for life and non-life operations.
- Income/expense statements and balance sheets of LICs and NLICs mapped separately then aggregated for Table 5.3 ICs.
- Disaggregated data on components of revenue and expenses would improve classifications but does not affect FSI compilation.

- Five additional FSIs for ICs (preserved descriptions):
  - OFCs (ICs) total assets to GDP: metric to gauge volume of OFCs (ICs) within overall economy. GDP figures derived from IMF’s World Economic Outlook (WEO) database.
  - Shareholder equity to total invested assets (LICs, NLICs, ICs): proxy for capital adequacy and leverage; numerator = capital and reserves; denominator = sum of ICs’ holdings of currency and deposits, loans, debt securities, equity and investment fund shares, other financial assets, financial derivatives, and nonfinancial assets held for investment purposes.
  - Combined ratio (NLICs): for NLICs only; = (net incurred losses + underwriting expenses) / net earned premium. Healthy market: ratio < 100 percent.
  - Return on equity (ROE) (LICs, NLICs): calculated using annualized net profit after tax divided by average capital and reserves of ICs; should be interpreted with equity to invested assets.
  - Return on assets (LICs): = annualized net profit/losses before tax divided by average total assets; annualized net profits and total assets calculated using same framework as for DTs.

Recommendation (preserved exactly):
- The CBL to start compiling five additional FSIs for ICs of which one relates to the size of the OFC sub-sector (ICs), effective from March 2020 data for dissemination in the FSIs website by September 2023.

*IMF | Technical Report – Kingdom of Lesotho   Financial Soundness Indicators | content unit 17.*

### 38. Following the successful mapping of source data to the new FSI-SRs, as recommended by the

### tarea2024008 - 38. Following the successful mapping of source data to the new FSI-SRs, as recommended by the

### FSI reporting and alignment
- Following successful mapping of source data to the new FSI-SRs, the CBL started reporting FSIs for DTs to STA for dissemination in June 2023.
- Recommendation: The CBL should align the definitions of FSIs that are currently produced with that of the 2019 FSIs Guide to facilitate compilation and dissemination of the FSIs.

### Metadata updates and publication
- The mission assisted FSI compilers in updating the contents of the new Tables 2 and 3 of the metadata for Lesotho; the CBL started reporting this metadata to STA in July 2023.
- The published metadata provides additional information on:
  - Structure of the banking sector.
  - National accounting and regulatory frameworks underpinning production of FSIs for banks versus the methodology in the 2019 FSIs Guide.

### Resources, training, and technical cooperation
- The mission encouraged CBL staff to attend IMF regional and HQ training courses on financial sector statistics.
- CBL staff compiling FSIs for DTs and ICs would benefit from participation in STA training delivered at IMF HQ (each course once every two years) and regional centers.
- Further details are available on the IMF’s Institute for Capacity Development webpage.

### CBL officials met during the mission (selected)
- Ms. Puseletso Tau — Director, Banking Supervision and Financial Stability Department
- Mr. Nkhahle Seeiso — Head, Financial Stability Division
- Mr. Refiloe Tsephe — Section Head, Macroprudential Policy, Research and Analysis
- Mr. Ntsane Moliko — Section Head, Macro-Regulatory Environment and Resolution Planning
- Additional staff across Banking Supervision, Financial Stability, Pension and Securities Supervision, Non-Banks Supervision, Insurance Supervision, and Statistics Division were met.

### Financial Soundness Indicators for DTs and ICs (2022 Q1–2022 Q4) — Core FSIs (selected)
- Regulatory capital to risk-weighted assets: 27.0, 23.9, 23.4, 24.0
- Tier 1 capital to risk-weighted assets: 29.0, 25.7, 25.1, 25.6
- Nonperforming loans net of provisions to capital: 6.9, 8.1, 6.7, 6.0
- Tier 1 capital to assets: 13.5, 12.4, 12.0, 12.5
- Nonperforming loans to total gross loans: 4.4, 4.6, 4.4, 4.3
- Loan concentration by economic activity: 62.1, 64.1, 69.0, 66.2
- Provisions to nonperforming loans: 49.9, 49.7, 57.7, 61.2
- Return on assets: 2.5, 2.2, 2.1, 2.5
- Return on equity: 12.8, 10.6, 10.4, 12.5
- Interest margin to gross income: 55.4, 55.8, 56.1, 56.3
- Noninterest expenses to gross income: 70.2, 72.2, 72.2, 69.2
- Liquid assets to total assets: 26.4, 25.2, 22.6, 20.6
- Liquid assets to short-term liabilities: 38.5, 36.9, 33.2, 30.3
- Net open position in foreign exchange to capital: 251.6, 272.7, 263.8, 232.5

### Financial Soundness Indicators — Additional FSIs (selected)
- Large exposures to capital: 56.2, 66.8, 69.4, 66.8
- Gross asset position in financial derivatives to capital: 2.8, 0.6, 0.1, 1.8
- Gross liability position in financial derivatives to capital: 0.3, 3.0, 3.4, 0.8
- Trading income to total income: 4.6, 4.6, 4.6, 5.0
- Personnel expenses to noninterest expenses: 40.1, 40.6, 40.8, 40.8
- Spread between reference lending and deposit rates (bp): 1,191.5, 1,113.5, 1,105.8, 1,130.7
- Customer deposits to total (non-interbank) loans: 161.4, 153.8, 157.9, 153.9
- Foreign-currency-denominated loans to total loans: 0.0, 0.0, 0.0, 0.0
- Foreign-currency-denominated liabilities to total liabilities: 25.2, 24.9, 23.9, 38.3
- Credit growth to private sector: 7.3, 7.8, 5.0, 5.1

### Insurance corporations — selected FSIs (2022 Q1–2022 Q4)
- OFCs' assets to gross domestic product: Insurance Corporations: 21.8, 21.3, 21.4, 22.5
- Shareholder equity to total invested assets (Life insurance only): 15.5, 13.3, 14.8, 13.8
- Shareholder equity to total invested assets (Nonlife insurance only): 39.0, 38.3, 37.4, 32.7
- Shareholder equity to total invested assets (Life insurance & nonlife insurance): 16.5, 14.3, 15.8, 14.7
- Combined ratio (Nonlife insurance only): 74.3, 80.1, 77.2, 79.6
- Return on assets (Life insurance only): 9.8, 5.7, 4.9, 4.7
- Return on equity (Life insurance): 72.4, 42.6, 35.1, 32.9
- Return on equity (Nonlife insurance): -48.6, -27.1, -21.6, -13.5
- Return on equity (Life insurance & nonlife insurance): 59.2, 34.9, 28.8, 27.8

### Comparison of FSIs before and after the technical assistance — selected indicator changes and implementation notes
- Regulatory capital to risk-weighted assets: Numerator: No change; Denominator: No change.
- Tier 1 capital to risk-weighted assets: Numerator: No change; Denominator: No change.
- Nonperforming loans net of provisions to capital: Numerator: No change; Denominator: Total regulatory capital.
- Tier 1 capital to assets: Numerator: Tier 1 capital; Denominator: Total assets (Accumulated depreciation is to be deducted from the nonfinancial assets).
- Loan concentration by economic activity: New FSI compiled during the mission; Numerator: Loans to the top three economic sectors; Denominator: Loans to nonfinancial corporations.
- Provisions to nonperforming loans: New FSI compiled during the mission; Numerator: Specific provisions; Denominator: Nonperforming loans.
- Return on Assets (ROA): Numerator: Annualized net income before tax; Denominator: Average Total assets.
- Return on Equity (ROE): Numerator: Annualized net income after tax; Denominator: Average Capital and Reserves.
- Liquid assets to total assets: Numerator: Comprise cash, demand deposits and tradable CBL securities; Denominator: Total assets.
- Liquid assets to short-term liabilities: Numerator: Comprise cash, demand deposits and tradable CBL securities; Denominator: liabilities with a maturity of three months or less (To be implemented).
- Net open position in foreign exchange to capital: Numerator: To include rand positions as well as other foreign currencies; Denominator: Total regulatory capital.
- Large exposures to capital: Numerator: Total exposures to single or group of connected counterparties which are equal to or above 10 per cent of Tier 1 capital. (To be implemented); Denominator: Tier 1 capital.
- Personnel expenses to noninterest expenses: Numerator: Management fees are excluded; Denominator: Management fees are included.
- Spread between reference lending and deposit rates (basis points): Numerator: Weighted average of lending rates of banks using interest income-loan divided by non-interbank gross loans; Denominator: Weighted average of deposits rates of banks using interest expense divided by customer deposits.
- Customer deposits to total non-interbank loans: Numerator: Customer deposits include all deposits placed by residents or non-residents, except those placed by (resident or nonresident) financial corporations, central governments and central banks. Also include accrued interests; Denominator: No change.
- Foreign-currency-denominated loans/liabilities to totals: Numerator: Include rand positions as well as other foreign currencies; Denominator: No change.
- Credit growth to private sector: New FSI compiled during the mission. Credit to private sector include loans to private nonfinancial corporations and households and include securities issued by non-financial corporations held by banks.
- OFCs' assets to GDP: New FSI compiled during the mission. Numerator: OFCs' assets: Insurance Corporations; Denominator: Gross domestic product.
- Shareholder equity to total invested assets (Life and Nonlife): New FSIs compiled during the mission. Numerator: Capital; Denominator: Total invested assets.
- Combined ratio (Nonlife insurance only): New FSI compiled during the mission. Numerator: Net claims and underwriting expenses; Denominator: Net premium earned.
- Returns for insurance FSIs: Several ROA and ROE indicators for insurance were newly compiled during the mission with numerators and denominators aligned to insurance reporting (e.g., Net income before/after taxes, Total assets, Capital).

---


_Source: https://www.imf.org/-/media/files/publications/tar/2024/english/tarea2024008.pdf_