S&P Global Ratings' bank ratings criteria framework outlines the elements of an issuer's credit profile and how we assess these elements to determine the rating on an issuer. Although we consider many quantitative and qualitative factors, the following charts, graphs, and tables highlight some of the key ratios we consider in our assessments and are meant to provide additional transparency. The glossary explains the concepts and calculations of the reported metrics and ratios.

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Glossary

BLAST ratio (x): Broad liquid assets divided by short-term wholesale funding

Broad liquid assets.  The sum of cash, short-term interbank loans and reverse repurchase agreements and securities borrowing with banks maturing within one year, short-term reverse repurchase agreements and securities borrowing with nonbanks net of haircut maturing within one year, and securities holdings net of haircut less restricted cash.

Short-term wholesale funding.  The sum of short-term interbank and debt market funding maturing within one year, repurchase agreements and securities lending, acceptances, and nonderivative trading liabilities.

Customer loans-to-deposit ratio (%): Customer loans (net) divided by customer deposits

Net customer loans.  Customer loans (gross) net of loan loss reserves and net of reverse repurchase agreements and net of securities borrowing.

Customer deposits.  Customer deposits net of repurchase agreements and net of securities lending.

Efficiency ratio (%): Noninterest expenses divided by operating revenue

Noninterest expenses.  Includes personnel expenses, premises, other noninterest expense, depreciation and amortization, brokerage clearing and exchange fees, marketing costs, and commission expenses.

Operating revenue.  Includes net interest income plus operating noninterest income.

NPA ratio (%): Adjusted nonperforming assets - restructured loans/customer loans + other real estate owned

Gross nonperforming assets.  Sum of nonaccrual loans, restructured loans, repossessed real estate owned, and loans over 90 days past due but accruing.

Adjusted nonperforming assets.  Gross nonperforming assets minus loans 90 days past due guaranteed by government, nonaccrual loans guaranteed by government, and OREO protected by FDIC loss-sharing agreements.

Customer loans + OREO.  Loans to nonbank customers net of unearned income and net of reserves and other real estate owned.

Loan growth: Change in gross customer loans

Customer loans (gross).  Loans to nonbank customers before reserves but net of unearned income.

Net interest margin (%): Net interest income to average earning assets

Net interest income.  Interest income net of interest expense. May include dividend income and loan fees according to convention of the country.

Earning assets.  Interbank deposits, reverse repos, securities, gross loans and leases.

Noninterest income to operating revenues (%)

Noninterest income.  Total noninterest revenue.

Operating revenues.  All revenues net of interest expense and nonrecurring income.

Pretax profit margin: pretax profit divided by operating revenue

Return on average assets (%): Net income divided by average assets

Risk-adjusted capital ratio (%): Total adjusted capital/risk-weighted assets

Adjusted common equity.  Common equity and equity minority interests minus revaluation reserves, goodwill, other nonservicing intangibles, interest-only strips (tax effected), equity in unconsolidated subsidiaries, and tax loss carryforwards, or other deferred taxes not permitted by regulators in the U.S. We exclude all hybrid capital instruments from adjusted common equity.

Total adjusted capital.  An enlarged and globally consistent definition of the amount of capital a bank has available to absorb losses. Total adjusted capital (TAC) includes hybrid capital components that are, in our view, of somewhat weaker quality than those included in adjusted common equity, our measure of consolidated core capital. This reflects our view of the equity content of hybrid capital instruments and the equity-like characteristics of preferred stock.

Risk-weighted assets.  We calculate risk-weighted assets (RWA) by multiplying the exposure amount by the associated risk weight (sum of RWA credit risk, RWA market risk, and RWA operational risk).

Stable funding ratio (SFR) (%): Available stable funding divided by stable funding needs

Available stable funding.  The sum of total equity net of intangibles, customer deposits, and long-term interbank and debt market funding including hybrid instruments with minimal equity content maturing after one year.

Stable funding needs.  The sum of customer loans (net), short-term reverse repurchase agreements, and securities borrowing with nonbanks maturing within one year net of haircut, long-term interbank loans, and reverse repurchase agreements; and securities borrowing maturing after one year, securities holdings net of haircut, restricted cash, all other assets net of haircut, and off-balance sheet credit equivalents net of haircut.

Total payout ratio: the sum of common dividends and share repurchases divided by net income minus preferred dividends