Statistics on balance sheets of banks and mortgage banks
1 Administrative Information about the Statistical Product
1 Administrative Information about the Statistical Product
Statistics on balance sheets of banks and mortgage banks.
1.2 Subject Area
Balance sheets and flows of the MFI sector
Money and credit market
Banks and mortgage-credit institutes
1.3 Responsible Authority and contacts
Statistics Faroe Islands
Jonhard Eliasen, e-mail: firstname.lastname@example.org
1.4 Purpose and History
The purpose of the statistics is to analyse the development in the monetary financial institutions (MFIs) with main focus on their lending and deposits.
The financial system of the Faroes has been relatively unstable in the past. At the same time statistics on money and credit markets of the Faroes have been scarce or non-existing.
Recently Statistics Faroe Islands and Centralbank of Denmark agreed on giving financial statistics on the Faroese monetary sector a high priority. The cooperation between these institutions was formalized with an agreement signed by the parties on the 2nd of May 2013.
1.5 Users and Application
The statistics are used to analyse growth in lending, types of lending, interest rates, market shares, business cycles, financial stability etc.
The users are financial institutions, government institutions, professional and industrial bodies and others.
The statistics on balance sheets and flows are collected from MFIs in the Faroes. MFIs in Denmark are included in cases where deposits and other instruments on their balance sheet have Faroese counterparts. The reporting population covers banks, mortgage banks, other credit institutions, money market funds and Danmarks Nationalbank.
1.7 Legal Authority to Collect Data
The legal basis for the collection of data from MFIs is to be found in Act of the Faroese Parliament no 64 from the 26th of May 2011 (Lóg um Hagstovu Føroya) and act of the Danish Parliament no 116 of 07.06.1936 as last amended by act no 451 of 23th of May 2012 (Lov om Danmarks Nationalbank) and in put into force in Faroese jurisdiction by consent of the Faroese Parliament on the 8th of Mai 2012 (Parliament file no 164/2011).
1.8 Response Burden
The MFI-manual on MFI statistics groups reporting units into full reporting units (relatively large finacial institutions) and tail institutions. The reporting burden of the latter is considerably smaller than for full reporting units.
The MFI reporting population in the Faroes consists at present of the 4 banks, which have domicile in the Faroes. All of these have been defined as full reporting institutions.
2.1 Description of Contents
The statistics contain a statement of the MFI sectors' assets and liabilities and an account of the monthly movements in the balance sheet items. Interests are collected for loans, deposits and other relevant instruments. Data is collected from all MFIs of the Faroes, including branches and subsidiaries of Faroese MFIs abroad. Data from Danish banks, mortgage banks amongst others are collected for loans, deposits and other instruments in cases where these do have counterparts residing in the Faroes.
2.2 Statistical Concepts
The population comprises:
- Full reporting institutions covering at least 96 per cent of the total balance sheet of the MFI sector.
- Tail institutions (in Denmark) covering the remaining of the total balance sheet of the MFI sector.
The MFIs' balance sheets are divided into the following key items:
- Cash balance comprises legal means of payment, including foreign banknotes and coins.
- Loans comprise loans granted on the basis of non-negotiable documents or without underlying documents, as well as financial leasing contracts. Negotiable loans granted on the basis of a single document are also included.
- Debt securities are financial assets not giving the holder any right of ownership in relation to the issuers, e.g. bonds, money-market papers and certificates of deposit issued by Centralbank of Denmark. Holdings of debt securities issued by the reporter itself are included on neither the asset nor the liabilities side.
- Shares and other equity are financial assets giving the holder a right of ownership in relation to the issuers, e.g. shares, investment fund shares, guarantor certificates, general partners' shares in limited partnerships and capital contributions in cooperative societies (certificates of membership). Holdings of shares and other equity issued by the reporter itself are not included on the asset side. Holdings of shares and other equity issued by the reporter itself are subtracted from capital and reserves to the value they are acquired for.
- Financial derivatives comprise unsettled spot transactions and derived financial instruments (forward contracts, futures, options, swaps, FRAs, etc.). Financial derivatives contracts with a positive net market value on the balance sheet date are carried as assets, while financial derivatives contracts with a negative net market value are carried as liabilities.
- Other assets comprise tangible and intangible fixed assets according to current accounting provisions, and other assets which do not fall under other categories.
- Banknotes and coins in circulation are all circulating banknotes and coins issued by Centralbank of Denmark.
- Deposits comprise deposits and lending in all categories which are not based on the issue of negotiable securities.
- Capital and reserves comprise the total net capital for statistical purposes, including the nominal value of shares and other equity issued by the reporter itself, as well as the profit for the year to date. The item also includes the correction account for the loan portfolio, i.e. total provisions.
- Other liabilities are liabilities which do not belong to any of the other categories.
The valuation of balance sheet items excluding deposits and lending is at market value. If a market value cannot be set objectively a best estimate of market value is applied.
Deposits and lending are compiled at nominal value in the balance sheet, although index-linked lending is stated at the index-linked nominal value. Bond-based loans (mortgage loans from mortgage banks) are also compiled at the market value of the bonds, and are carried on the balance sheet at this market value.
All items are included as gross amounts in the balance sheet. Lending is compiled including provisions as of the balance-sheet date. Balance-sheet items in foreign currency are translated into Danish kroner when reported. Balance-sheet items are calculated on the basis of the closing rate at the time of calculation while transactions are calculated on the basis of the foreign-exchange rate at the time of the trade. The closing rate must be identical to the rate used in accounting practice.
Information on movements in the domestic lending of mortgage banks (new loans (gross), extraordinary prepayments and instalments) is based on a separate compilation of the credit flows of mortgage banks.
New loans (gross) are valued at the market value at the time of transaction. Extraordinary prepayments are valued at the guaranteed redemption price on the redemption date. Instalments are valued at nominal value. For instalments for cash loans the cash loan instalments are compiled.
Distribution by sector
The distribution by sector is based on the sector classification set out in accordance with the European System of Accounts (ESA2010). For accounts with Faroese residents the distribution by sector and industry is based on the Statistics Faroe Islands Business Register (CVR), and the data registered therein concerning the companies' industries and sectors. Self-employed individuals are included as an individual sub-sector of the household sector.
Distribution by country
The country indicates where the counterpart is domiciled. Natural persons are resident in the country of their permanent address, and legal entities in the country where their permanent establishment is located.
Distribution by maturity
In the distribution by maturity of the balance-sheet items the criterion applied is generally original maturity. Several series also include residual maturity and time to next interest-rate fixation.
Financial flows during the month correspond to the development in the relevant balance-sheet items – i.e. the balance-sheet items at month-end less the balance-sheet item at the beginning of the month – and are given by the sum of net transactions and revaluations, etc.
Net transactions correspond to the net value of the month's transactions.
Value adjustments, etc. cover all changes in the balance-sheet item that are not related to transactions, including changes as a result of market-price adjustments, exchange-rate adjustments, reclassifications, etc. Value adjustments also cover losses on lending.
3.1 Reference Period
The statistics are prepared on a monthly basis.
3.2 Date of Publication
The statistics are published every month on the 25th day after the end of the reference period.
The statistics are usually published without delay in relation to the scheduled date.
New data is published every month.
4.1 Overall Accuracy
The statistics are based on information collected from all Faroese MFIs, including their subsidiaries and branches abroad.
Aggregated data on Danish MFI's with Faroese counterparts are provided by Centralbank of Denmark. Apart from data for December, after the annual revisions in April, data from the smallest Danish MFIs are grossed up. This group accounts for 4 per cent of the total balance of the Danish MFI sector.
Danmarks Nationalbank is responsible for contacting any newly established MFI on the basis of information from the Danish Financial Supervisory Authority.
The accuracy of the statistics is dependent on the accuracy of the reports delivered by the institutions, and especially the quality of the reports delivered by the largest institutions is crucial. With a contribution margin of 100 per cent for December, after annual revisions in April, and more than 96 per cent in the remaining months, the overall accuracy of the statistics is considered to be high.
4.2 Sources of Inaccuracy
Statistics Faroe Islands and Centralbank of Denmark set out guidelines for the Faroese MFIs' reporting to the statistics, but there is a risk that the guidance is interpreted differently by the institutes and therefore may lead to non-consistent reporting. However, a large number of quality checks are performed on the individual reports as well as across all reports, in order to minimise errors made by the individual reporter and differences in interpretation among MFIs.
During the control and publishing phases several manual procedures are conducted which involve risks of errors.
4.3 Measures of Accuracy
The statistical uncertainty is not calculated.
5.1 Comparability over Time
The amount of detail in the statistics is increased regularly. Some changes in compiling and reporting methods can occur, when the statistics is updated. Efforts are made to handle this by disseminating backdata based on the new definitions.
5.2 Comparability with other Statistics
On an annual basis the Danish Financial Supervisory Authority publishes the balance sheets of banks and mortgage banks both at institution and aggregated levels.
5.3 Coherence between Provisional and Final Statistics
The statistics are normally revised 2 reference periods back when the present month is published, cf. also revision policy of Centralbank of Denmark for financial statistics and the appurtenant revision cycle.