Home > Statistics > Financial activities > Concepts and definitions

Concepts and definitions

Account receivable

Credits included in the outstanding credit for which usually a promissory note is a proof. Accounts re-ceivable from an employer enterprise or a real estate company belonging to the group are not included in the outstanding credit. If a promissory note is made for the accounts receivable, this is included in the outstanding credit.

Active card accounts

Active card accounts include all accounts that have been used at least once during the year.

Active card accounts

Active card accounts include all accounts that have been used at least once during the year.

Actual credit card

Actual credit cards usually offer flexible credit for a period of at least one month and as long as several years. Most of the retail credit cards belong to this category.

Whether a card should be categorised as a charge card or a credit card is a matter of judgement when it comes to cards that combine features of both charge and credit cards.

Average maturity

The average maturity of new credits granted during the quarter, days.

The arithmetic mean of original maturities (agreed at the time of borrowing) of new credits granted during the quarter.

Bill of exchange

A bill of exchange is a payment order issued by the drawer, or a debt instrument signed by the drawee. This category includes the balance of bills receivable granted from own assets or intermediated from central government funds or funds of other financial institutions. So-called "negotiable promissory notes" belong to the category "other credit".

Bond with equity warrants

A bond with equity warrants is a bond that involves warrants. A bond with an equity warrant is sold on the primary market with its warrant attached. However, the two components have separate secondary markets. Bonds with equity warrants are loans with subscription rights, i.e. subscribers receive, in addition to principal and interest payments, the right to subscribe to the issuer's shares at a specified price and during a specified period. If the credit institution holds detached warrants, they are to be treated as shares and equity. They should not be reported in this category.

Bonds

Bonds belong to capital market claims (original maturity of over 12 months) such as ordinary bonds (reference loans/benchmark loans), debentures, warrant bonds of bond format, convertible bonds and perpetuals, and other capital market claims equal to them.

In the statistics on outstanding credit, shares, derivatives and mutual funds shares are not included in out-standing credit.

Capital market claim (excl. shares)

Of bonds: reference loans (benchmark loans), debentures, bonds with equity warrants, convertible bonds, perpetuals and other capital market claims (excl. shares).

Certificate of deposit

A certificate of deposit is a zero-interest negotiable bearer instrument issued by the Bank of Finland or deposit banks. Certificate of deposit bearer instruments issued abroad are included in certificates of deposit.

Charge card

Charge cards usually offer interest free credit of up to two months (e.g. Visa, and customer cards provided by petroleum companies).

Whether a card should be categorised as a charge card or a credit card is a matter of judgement when it comes to cards that combine features of both charge and credit cards.

Claims in respect of credit cards

Claims of the credit institution in respect of overdrafts of customers who have entered into a credit card agreement.

Convenience credit card credit:

Convenience credit card credit is defined as the credit granted at an interest rate of 0 per cent in the period between the payment transaction(s) effectuated with the card during one billing cycle and the date at which the debit balances from the billing cycle become due. Convenience credit can be granted either via a card with a delayed charge facility (debit card) or via a credit card (i.e. cards providing convenience credit and interest bearing credit, or extended credit card credit).

Extended credit card credit:

Extended credit card credit is defined as the credit granted after the due dates of the previous billing cycle or cycles have passed, i.e. debit amounts on the card account have not been settled when this was first possible. Interest rate exceeding 0 per cent is usually charged on the extended credit. The rate of interest may also be tiered.

Claims in respect of hire purchase contracts

This category includes claims in respect of hire purchase contracts, financial services of hire purchase transactions, financing of hire purchase sales, financing of acquisitions, and other financing based on a hire purchase contract or a related contract.

Commercial paper

A commercial paper is a zero-interest negotiable bearer instrument issued by a company or a credit institution. Commercial papers and euronotes (bearer instruments) issued abroad are included in commercial papers. Commercial papers include 'OT' certificates which are mainly short-term bearer instruments arranged by the Finnish OKO Bank Group.

Confirming (accounts payable funding)

Financing of the accounts payable of a company that have originated from acquisitions of current assets and fixed assets based on a financing agreement between the company and the credit institution. Accounts payable funding is usually secured by a bank guarantee.

Consumer credit

Loans granted to households for the purchase of consumer goods and services intended for personal use.

The item includes all bank account overdrafts and credit card credits, including those on cheque accounts with overdraft facility, credit granted for trips (other than study or business trips), and other credit granted to households for consumption (e.g. on a car, domestic appliances, etc.).

Convertible bond

Convertible bonds are bonds that the holder may convert into a specified number of the issuer's shares within a specific period. Convertible bonds differ from bonds with equity warrants in that the option component cannot be detached from the bond component. After the option has been exercised, the principal tied to the convertible bonds is removed from the issuer's accounts and converted into share capital.

Credit card credit

The unpaid capital of actual credit card credits (extended credit card credits) and convenience credits at the end of the quarter.

Credit card debt

Unpaid portion of the credit card debt at the end of the year. Includes unpaid interests added to the debt capital by the credit card company.

Credit card debt

Unpaid portion of the credit card debt at the end of the year. Includes unpaid interests added to the debt capital by the credit card company.

Credit losses

Allocated credit loss reserves are removed from the outstanding credit only when they are directed to the customer and the credit loss is recorded.

Debenture

Debentures are bonds with a lower priority than that of the issuer's other commitments.

Debt instruments issued by asset management companies

Zero-interest bearer instruments issued by asset management companies.

Direct leasing

A short term contract, closely resembling a rental contract, that can be revoked by the lessee before the end of contract period if he so wishes. The asset can be leased to several successive lessees, meaning that the leasing period usually does not cover the asset's entire economic lifetime. The lessee retains his right to revoke the contract. The leasing charges usually include both service and rental costs.

Factoring (accounts receivable funding)

In factoring, a firm converts its accounts receivable into cash by turning them over to a credit institu-tion/financing company in exchange for working capital. The capital given to enterprises as financing of working capital is recorded in this category. The buyer pays the financing company directly for the account receivable concerned. The accounts receivable are secured by the transferred contracts related to the claim.

Both domestic factoring and export factoring are recorded in this category.

Financial leasing

The parties of financial leasing are the seller of the object, the financing enterprise and the lessee.

An arrangement whereby a finance company acquires an asset that the lessee needs, and leases it to the lessee under a long-term leasing contract. The main categories of assets subject to financial leasing in Finland are machinery, installations and motor vehicles. Buildings and land are among the assets that may be the subject of lease. The leaser finances his acquisition by leasing the asset to the lessee.

The finance company retains ownership of the asset, and ownership is normally not transferred to the lessee after the expiration of the contract. The lessee has the right to use the asset over the lease period, which usually covers all of the economic lifetime of the asset.

General credit cards

General credit cards are usually issued by bank-owned financial companies and are accepted by nearly all retailers. The category is based on the classification used by the Finnish Bankers' Association (Cf. the FBA's "Bank cards" brochure).

Housing credit

Loans granted for the development or purchase of residential buildings or shares or equity in housing companies or co-operatives, or residential real estate companies. In addition, the category includes loans granted for renovation concerning residential buildings, housing companies, co-operatives or residential real estate, including loans for refurbishments of lesser scope than basic renovation. Loans granted for dwellings purchased as investments are also classified as housing loans.

Housing credit for free-time residences

Loans granted for the purchase or renovation of new or old free-time residences, including loans for refurbishments of lesser scope than basic renovation.

Leasing assets

The undepreciated balance of the acquisition cost of the assets subject to lease, including any advance payments made in respect of the assets.

Lending

Lending I:

Overdrafts on current accounts

Bills of exchange

Promissory note loans

Lending II:

Claims in respect to hire purchase contracts

Factoring (accounts receivable funding)

Confirming (accounts payable funding)

Claims in respect of credit cards

Other lending

Repo

Financial leasing

Local government paper

A marketable money market promissory note issued by local government.

Merger

The portfolio data of a merging financial institution are not reported as new credits in the outstanding credit. After the merger, Statistics Finland adds up the outstanding credit of the merged financial institutions.

Money market investment

The item includes investments in the wholesale money market.

Money market paper

Short-term (original maturity not more than 12 months) marketable money market claims, such as certificates of deposits, commercial papers and local authority papers, treasury bills and debt instruments issued by asset management companies, marketable money market promissory notes and other marketable money market claims. Money market investments and non-marketable money market promissory notes are not included in outstanding credit.

Money market promissory note (non-marketable)

The item includes non-marketable money market claims based on promissory notes.

Non-marketable money market promissory notes are not included in outstanding credit.

New credit

The concept includes withdrawals of new credits and renewal of credits with substantially changed conditions.

Changes to interest rate tying alone do not constitute such changes if other conditions, such as the loan period, remain unchanged. Only the proportion exceeding the amount of the old loan is reported of loan renewals in which the total amount of credit exceeds the amount of the credit that is being renewed.

Lending portfolio purchases are not recorded as new credits.

New credits raised during the quarter from other loans (incl. repos).

Repos do not relate to lender sector VIP 1. Small loan companies.

Number of customers

Number of customers of small loan companies during a quarter. All persons to whom new credit has been granted during the quarter are counted as customers. A customer who has raised several credits with the same company during a quarter is only counted once as customer. Customers who have not raised new credit during a quarter but have had unpaid loan capital with the company during the quarter are not counted as customers for that quarter.

Other bond

Other bonds than a debenture or a reference loan issued by central government. This category includes such as medium term notes.

Other capital market instruments, excluding shares

This category includes such as medium term note certificates.

Other lending

This category comprises lending items included in lending II. Such items include contract financing not related to hire purchase contracts and inventory financing related to the financing of working capital. Combinations of several types of financing, such as financing of deferred payments and credit sales are reported here if it is not possible to classify them in any other category.

Other purpose of use

Loans granted for e.g. business activity (production purposes), arrangement of debts and other similar purposes.

A credit granted to a farmer for the purchase of seed grain or a tractor is not consumption credit but comes under the category of other purpose of use, but a credit granted to a farmer for the purchase of a passenger car is classified as consumption credit.

Outstanding credit

The item "outstanding credit" includes outstanding euro denominated credit and outstanding foreign currency denominated credit. Euro denominated credit includes euro denominated loans and advances, loans granted from central government funds, as well as bonds and debentures classified as investments. Foreign currency denominated credit includes foreign currency denominated loans and advances, as well as foreign currency denominated bonds classified as investments.

The item "outstanding loans", both euro and foreign currency denominated, includes overdrafts, bills of exchange, promissory notes and other loans.

The item "bonds classified as investments" includes bonds and debentures that are recorded as investment assets. In the case of credit institutions, the item includes transferable bonds and debentures. In the case of insurance companies, the item includes bonds and debentures classified as investments.

Three different concepts of outstanding credit are used for statistical purposes.

1. Total lending:

This item includes all loans granted by a sector, i.e.:

• loans to the public,
• loans to foreign borrowers,
• loans between financial institutions, central government and social security funds.

Loans granted from central government funds are included twice in total lending:

a) first as central government credit to the banking sector, and a second time as loans from the banking sector to the public,

b) first as central government credit to the municipal sector, and a second time as loans to the public.

2. Loans to the public:

Loans to the public equals total lending minus loans to foreign borrowers and overlapping credit (loans between financial institutions, central government and social security funds as well as loans intermediated from central government funds).

3. Loans to enterprises and entrepreneur households:

This item includes loans to sectors 1 (enterprises) and 51 (households of employers and own-account workers). The item appears as a sum total in tables where loans are classified by the borrower's economic activity.

Loans to sectors 1 and 51 include housing loans granted to these sectors.

Overdrafts on current accounts

Overdrafts on current accounts (not of promissory note format) include the balances of all accounts with overdraft facility at the end of a quarter. The total amount of the credit is reported irrespective of whether it is under or over the revolving and credit limit and/or the maximum duration agreed by the lender and borrower in advance, if the overdraft has not been recorded in other claims/other loans in the data provider's information systems.

Perpetuals

This category consists of perpetual debt securities. It is characteristic of perpetuals that the debtor is committed to pay interest at a specified rate, usually linked to money market interest rates but not to repay the loan principal. A perpetual is a bond no part of which is repaid and which has no maturity date but which pays regular interest.

Promissory note loan

The outstanding balance on promissory notes granted by financial institutions from depository assets (or by insurance corporations from insurance funds) or from equity capital. Loans granted by institutions supervised by the Finnish Centre for Pensions are also included, as are interest subsidy loans, and, in the case of insurance corporations, non-mandatory lending as well as relending to employers and policy-holders.

Property leasing

A form of financial leasing of immovable property. Sale and leaseback of immovable property is an arrangement where the owner of a property sells the property to a finance company and immediately leases it back. The lessee continues to hold and use the property throughout the entire leasing period. The lessee usually retains the option to repurchase the property subject to certain conditions.

Specified data on property leasing and other sale and lease back activity were collected in the statistics on financial leasing until 2008. From 2009 onwards these are included in other financial leasing activity in the statistics.

Reference loan (benchmark loan)

The reference loan refers to serial bonds or housing bonds issued in large quantities by the state and quoted constantly by primary dealers. The yield on these bonds indicates the risk-free market interest rate. Primary dealers are banks or securities intermediaries, which have undertaken, based on an agreement with the State Treasury, to participate in the auctions for benchmark bonds and to maintain a secondary market for them. Under an agreement signed by the Bank of Finland and the primary dealers, the primary dealers undertake to observe the codes of conduct for dealing in the secondary market for benchmark bonds.

Repo

The balance sheet includes repos based on binding resale commitments at purchase price. Repos are part of the credit institution's lending. The credit institution acts as the buyer (investor) and purchases, with commitment to resell, securities owned by its customers.

Repo options are reported as off-balance sheet items.

Retail credit card

Retail credit cards are accepted at designated retail outlets. Retail credit cards usually offer interest-bearing credit of more than two months.

Shares and equity

Shares and equity, excluding mutual funds shares. The category includes shares in limited companies and corresponding participations in the share capital of other company forms, excluding mutual funds shares. Shares in limited companies, real estate companies and housing companies, for example, are included in this category.

Small loan company

A company whose principal business activity is granting of small or smallish unsecured consumer credits with a typical original maturity, or repayment term, of less than three months. These loans are typically paid back in one or just a couple of instalments. In addition, the loans generally carry no actual nominal rate of interest, but all their costs usually arise from other expenses, such as handling and processing fees, and service and SMS charges. The services of a small loan company can typically be ordered by SMS or via the Internet, whereby the loan is at the client's disposal very quickly.

Student loan

Loans granted to private persons for studies or financing of study trips and similar.

Total lending

Total lending includes all credits granted by the lender sector to be described. Included are thus

-Loans to the public

-Loans to foreign borrowers

-Loans between financial corporations, central government and social security funds.

As a total sum, outstanding credit includes overlapping credits. Loans granted from central government funds are included twice in total lending:

1. First as central government credit to the banking sector, and a second time as loans from the banking sector to the public,

2. First as central government credit to the municipal sector and a second time as loans granted from central government funds to the public.

Treasury bill

A treasury bill is a zero-interest negotiable bearer instrument issued by a central government (not only that of Finland).