3 Issuing costs of state guaranteed bonds - Financial Risk and ...

4 Impact of state guaranteed bonds on bank lending, funding and profitability performance
Table 14: Summary of bank outcome variables
Outcome BankScope name Summary
Bank credit extension Net Loans 1 Total value of outstanding loans as reported on the balance sheet. Net Loans is an aggregate value
of:
Residential Mortgage Loans
Other Mortgage Loans
Other Consumer/Retail Loans
Corporate & Commercial Loans
Other Loans
Bank access to funding Total Liabilities and Equity
Less: Reserves for Impaired Loans/NPLs
Total value of liabilities and shareholder’s equity as reported on the balance sheet.
Total deposits and short-term funding Deposits and short-term funding includes:
Customer Deposits
Deposits from Banks
Repos and Cash Collateral
Total long-term funding
Other Deposits and Short-term Borrowings
Includes Senior Debt Maturing after 1 Year + Subordinated borrowing + Other funding
Bank performance Net interest income
Operating income
Includes Gross interest and dividend income - Total interest expense
Leverage 1-(Total equity/Total assets)
Tier 1 Capital ratio This measure of capital adequacy measures Tier 1 capital. That is shareholder funds plus perpetual
non cumulative preference shares as a percentage of risk weighted assets and off balance sheet
risks measured under the Basel rules. This figure should be at least 4%.
Note: 1 Disaggregated loan data are generally missing. For this reason, we focus on the aggregate loan variable.
Source: BankScope
London Economics
The impact of state guarantees on banks' debt issuing costs, lending and funding policy 84