form pl
Download
Skip this Video
Download Presentation
Form PL

Loading in 2 Seconds...

play fullscreen
1 / 51

Form PL - PowerPoint PPT Presentation


  • 403 Views
  • Uploaded on

Form PL Neil Bush [email protected] Objectives Broad issues – e.g. “coding-up”, similarity between statutory accounts and PL figures Common problems – e.g. interest rate swaps, netting, net spread earnings Forum for questions and issues not covered Outline of Seminar

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Form PL' - libitha


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
objectives
Objectives
  • Broad issues – e.g. “coding-up”, similarity between statutory accounts and PL figures
  • Common problems – e.g. interest rate swaps, netting, net spread earnings
  • Forum for questions and issues not covered
outline of seminar
Outline of Seminar
  • Overview of PL requirements
  • ONS rationale
  • Interest
  • Net spread earnings and dealing profits
  • Fees, dividends, provisions and transfer pricing
  • Part 2 of form (formerly Form BP)
coding up
“Coding-up”
  • In line with Balance Sheet
  • Move away from manually intensive process
  • If problems, contact us
benefits of pl form
Benefits of PL Form
  • Improved economic data on GDP and Balance of Payments – use by MPC, Treasury, banks’ economists
  • As important as balance sheet data
  • Financial Stability role of BoE
format of a3
Net interest incomeFormat of A3
  • Dividends received
  • Net fees and commissions

- Net spread earnings

  • Other Operating income
  • Operating expenditure
  • Dividends paid
format of pl
Net interest income

Retained profit

Format of PL

- sectoral split

  • Dividends received
  • Net fees and commissions

- product split

  • Dealing profits

- Net spread earnings

  • Other Operating income
  • Operating expenditure

- breakdown

  • Exceptional and extraordinary items
  • Tax
  • Dividends paid
  • Provisions for bad and doubtful debts

- sectoral split

differences with published accounts
Differences with published accounts
  • Definitions, e.g. treatment of interest rate swaps
  • Reconciliation matrix – bilateral negotiations with 10 largest UK-owned banking groups
reporting frequency
Reporting frequency
  • If A3 and BP both on same frequency – remain same
  • If quarterly on one, annual on other – report whole form quarterly
  • Notified by end-September
help with pl form
Help with PL Form
  • Seminar
  • FAQs on Monetary and Financial Statistics section of BoE website
  • Visits to reporters
  • E-mail: [email protected]
interest lines
Interest lines
  • Sectoral breakdown
  • Potential problem areas
  • Netted accounts
potential problem areas
Potential problem areas
  • Interest rate swaps
    • Should not be in interest lines
    • Dealing profits under derivatives
  • Inter-desk deals
    • Netted and therefore should have no effect
netted accounts
Netted accounts
  • Basically the same treatment as on the A3
  • Except if a net flow is cross-sector
    • These should be excluded
  • Some examples
netted accounts21
Netted accounts
  • Loan and deposit for one customer

Interest is calculated gross

Interest is charged net

Interest should be reported gross

netted accounts22
Netted accounts
  • Credit and debit balances exist for the same customer

Interest is calculated net

Interest is charged/paid net

Interest can be reported on a net basis

netted accounts23
Netted accounts
  • Credit and debit balances exist, but apply to different sectors/held in different countries

Interest is calculated net

Interest is posted net

If gross flows not available, exclude

netted accounts in summary
Netted accounts – in summary
  • Consistent with ER
  • Small discrepancies with published accounts
  • FAQs
  • Contact us to clarify
concept of nses
Concept of NSEs
  • Part of dealing profits measuring service income.
  • Ideally – difference between sale/purchase price and mid-market price for all activities.
  • If not – accept for retail trades.
example of management information as proxy for nses
Example of management information as proxy for NSEs

£100

£93.33

C

S

T

$140

$140

Rates quoted: 1.40

Mid-market: 1.50

example of management information as proxy for nses29
Example of management information as proxy for NSEs

£6.67

£100

£93.33

C

S

T

$140

$140

Rates quoted: 1.40

Mid-market: 1.50

example of management information as proxy for nses30
Example of management information as proxy for NSEs

£5.41

£100

£94.59

C

S

T

$140

$140

Rates quoted: 1.40

Traders’ price: 1.48

capturing nses
Capturing NSEs
  • If cannot capture mid-market price: use management info measuring contribution of sales activity to trading business
  • Otherwise – discuss methodology with us
  • Questionnaire later 2003 on methodology
  • Item 8CA – NSEs on derivatives = optional
dealing profits
Dealing profits
  • Definition in line with published accounts
  • IAS on dealing profits– movement to fair value may affect definition on PL
the three alternatives for nses
The Three Alternatives for NSEs
  • Capturing difference – sales’ price and mid-market price for all transactions with non-bank counterparties
  • The above – but only with “retail” trades
  • Using management information to provide measure of sales activity in trading
other items on the pl
Other items on the PL
  • Fees
    • Product breakdown
    • Non-resident element
  • Dividends
  • Provisions
  • Transfer pricing
dividends
Dividends
  • Should be reported on a cash basis
  • Intra-company payments
    • Treat as any other dividend payment
transfer pricing
Transfer pricing
  • Responsible for large fluctuations on the expenditure line
  • Included in the breakdown of other expenditure
  • Quarterly figures
issues on part 2
Issues on Part 2
  • Reporting on branches, subs and associates
  • New definition of profit for items 31 and 32
  • Implications for BG
overview of part 2
Overview of Part 2
  • Area least changed from current A3/BP requirements
  • Reordering to move in line with PL format
  • Usually straight forward mapping with Part 1 (except product split of fees)
branches subs and associates
Branches, subs and associates
  • Associate: 10-50% of voting rights and influence
  • Subsidiary: over 50% of voting rights or controls composition of board
  • Branch: same legal entity

Cannot be more than one

profits losses items 31 and 32
Profits / losses (items 31 and 32)
  • Retained profit
  • But - exclude dealing profits
  • Plausibility questions – provide business reasons, particularly for increase in specific provisions
effect on form bg
Effect on Form BG
  • Definitions to be consistent with PL
  • References to individual boxes changed
  • PL-compatible BG in forthcoming Stats Notice
summary
Summary
  • Issues discussed – importance of “coding-up”, treatment of netted interest, product split of fees, Net Spread Earnings, transfer pricing, part 2 of form, etc.
  • BoE’s role in facilitating transition to

PL – Seminar, FAQs, bank visits.

ad