BANKING TERMS DEFINE by - RESERVE BANK OF INDIA (2)

Earnings

Total income : Sum of interest/discount earned, commission, exchange, brokerage and other operating income.

Total operating expenses : Sum of interest expended, staff expenses and other overheads.

Operating profit before provisions : Net of total income and total operating expenses.

Net operating profit : Operating profit before provision minus provision for loan losses, depreciation in investments, write off and other provisions.

Profit before tax (PBT) : (Net operating profit +/- realized gains/losses on sale of assets)

Profit after tax (PAT) : Profit before tax – provision for tax.

Retained earnings : Profit after tax – dividend paid/proposed.

Average Yield : (Interest and discount earned/average interest earning assets)*100

Average cost : (Interest expended on deposits and borrowings/Average interest bearing liabilities)*100

Return on Asset (ROA)- After Tax : Return on Assets (ROA) is a profitability ratio which indicates the net profit (net income) generated on total assets. It is computed by dividing net income by average total assets. Formula- (Profit after tax/Av. Total assets)*100

Return on equity (ROE)- After Tax : Return on Equity (ROE) is a ratio relating net profit (net income) to shareholders’ equity. Here the equity refers to share capital reserves and surplus of the bank. Formula- Profit after tax/(Total equity + Total equity at the end of previous year)/2}*100

Accretion to equity : (Retained earnings/Total equity at the end of previous year)*100

Net Non-Interest Income : The differential (surplus or deficit) between non-interest income and non-interest expenses as a percentage to average total assets.

Net Interest Income ( NII) : The NII is the difference between the interest income and the interest expenses.

Net Interest Margin : Net interest margin is the net interest income divided by average interest earning assets.

Cost income ratio (Efficiency ratio) : The cost income ratio reflects the extent to which non-interest expenses of a bank make a charge on the net total income (total income – interest expense). The lower the ratio, the more efficient is the bank. Formula: Non interest expenditure / Net Total Income * 100.

Ref : http://www.rbi.org.in/scripts/Glossary.aspx