Annual Report 2012 - National Savings Bank

269GLOSSARYCredit RatingsAn evaluation of a corporate’s ability torepay its obligation or the likelihood of notdefaulting, carried out by an independentrating agency.Credit RiskCredit risk or default risk is most simplydefined as the potential that a borrower orcounterparty will fail to meet its obligationsin accordance with agreed terms andconditions.Dealing SecuritiesMarketable securities that are acquired andheld with the intention of reselling them inthe short term.DebentureA medium-term debt instrument issued by aCorporate entity.Deferred TaxationSum set aside for tax in the FinancialStatements that will become payable ina financial year other than the currentfinancial year.DerivativeFinancial contract of which the value isderived from the value of underlined assets.De recognitionRemoval of previously recognized financialassets or financial liability from an entity’sstatement of financial position.DepreciationThe systematic allocation of the depreciableamount of an asset over its useful life.Economic Value AddedA measure of productivity which takes intoconsideration cost of total invested equityEffective Interest RateRate that exactly discounts estimated futurecash payments or receipts through theexpected life of the financial instruments orwhen appropriate a shorter period to the netcarrying amount of the financial asset orfinancial liabilityEquity MethodThe equity method is a method ofaccounting whereby the investment isinitially recognized at cost and adjustedthereafter for the post-acquisition changesin the investor’s share of net assets of theinvestee. The profit or loss of the investorincludes the investor’s share of the profit orloss of the investee.Effective Tax RateProvision for taxation excluding deferred taxdivided by the profit before taxation.Fair ValueThe amount for which an asset could beexchanged or a liability settled, betweenknowledgeable, willing parties in an arm’slength transaction.Financial Asset or FinancialLiability at Fair Value throughProfit or LossFinancial asset or financial liability that isheld for trading or upon initial recognitiondesignated by the entity as ‘at fair valuethrough profit or loss’.Financial InstrumentFinancial Instrument is any contract thatgives rise to a financial asset of one entityand a financial liability or equity instrumentof another entity.Foreclosed PropertiesProperties acquired in full or partial;satisfaction of debts.Foreign Exchange ProfitProfit earned on foreign currencytransactions arising from the differencein foreign exchange rates between thetransaction/ last Balance Sheet date and thesettlement/Balance Sheet date.General ProvisionsThese are provisions made on loans andadvances for anticipated losses on aggregateexposures where credit losses cannot yet bedetermined on an individual facility basis.GroupA group is a parent and all its subsidiaries.GuaranteesThree party agreement involving a promiseby one party (the guarantor) to fulfil theobligations of a person owing a debt if thatperson fails to perform.Held to Maturity InvestmentsNon derivative financial assets with fixed ordeterminable payments and fixed maturitythat an entity has the positive intention andability to hold to maturity.ImpairmentThis occurs when recoverable amount of anasset is less than its carrying amount.Impaired assets portfolioImpaired Assets Portfolio is the total of theindividually significant impaired loans andNATIONAL SAVINGS BANK . ANNUAL REPORT 2012