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GOI, GROSS OPERATING INCOME = CAPITAL RATIO. Calculated as revenues less operating expenses (general operating expenses, such as employee expenses and other administrative expenses, depreciation and amortisation).
GOODWILL. Goodwill is the amount by which the acquisition cost of a business exceeds the value of the net assets revalued at the time of acquisition. Every year, goodwill is tested for impairment, and any reduction in its value is recognised in the income statement.
GREEN BONDS. Bonds issued by an approved entity (business, local authority or international organisation) to finance an eco-friendly and/or sustainability-driven project or activity. These instruments are often used in connection with the financing of sustainable agriculture, the protection of ecosystems, renewable energy and organic farming.
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IMPAIRED LOAN. An impaired loan is a loan which has been provisioned due to a risk of non-repayment.
INTERNATIONAL INTEGRATED REPORTING COUNCIL (IIRC). The International Integrated Reporting Council is a global coalition of companies, investors, regulators, standard setters, the accounting profession and NGOs. It promotes communication about value creation as the next step in the evolution of corporate reporting.
INSTITUTIONAL INVESTORS. Businesses, public-sector bodies and insurance companies involved in securities investment, such as investing in the shares of listed companies. Pension funds and asset management and insurance companies come under this heading.
ISSUER SPREAD. Actuarial margin representing the difference between the actuarial rate of return at which the Group can borrow and that of a risk-free loan of identical duration.
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LEASING. Leasing is a financing contract between a financial institution, known as the lessor, and another party (such as a business, an SME and small business, a local authority, etc.), known as the lessee, for the rental of property or equipment. When the contract reaches its term, ownership of the asset is transferred to the lessee. The lessee may also opt to buy out the lease early.
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MUTUAL INVESTMENT FUND (FCP). Type of UCITS that issues units and does not have legal personality. By acquiring units, investors gain co-ownership of the securities, but do not have any voting rights. They are not shareholders. An FCP mutual fund is represented and managed from an administrative, financial and accounting perspective by a single management company, which may delegate these tasks.
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NET ASSET VALUE PER SHARE (NAVPS)/TANGIBLE NET ASSET VALUE PER SHARE (TNAVPS)*. Net asset value per share is one method used to calculate the value of a share. It corresponds to equity Group share adjusted for AT1 divided by the number of shares outstanding at the end of the period, excluding treasury shares.
Tangible net asset value per share corresponds to equity Group share, adjusted for AT1, i.e. restated for intangible assets and goodwill, divided by the number of shares outstanding at the end of the period, excluding treasury shares.
NET INCOME GROUP SHARE. Net income/(loss) for the financial year (after corporate income tax). Net income Group share is equal to net income less the share attributable to non-controlling interests in fully consolidated subsidiaries.
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OPERATING INCOME. Calculated as gross operating income less the cost of risk.
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RATING AGENCY. Organisation specialised in assessing the solvency of issuers of debt securities, i.e. their ability to honour their repayment obligations (principal repayments and interest payments over the contractual period).
RESOLUTION. Shortened form of “resolution of crises and bank failures.” In practice, two types of plan need to be drawn up for every European bank: 1) a preventative recovery plan prepared by the bank’s senior managers, and 2) a preventative resolution plan put in place by the competent supervisory authority. Resolution is before bankruptcy of the bank, to plan its ordered dismantling and avoid systemic risk.
REVENUES. Revenues correspond to the difference between banking income (interest income, fee and commission income, capital gains from market activities and other income from banking operations) and banking expenses (interest paid by the bank on its funding sources, fee expenses, capital losses arising on market activities and other expenses incurred by banking operations).
RISK APPETITE. Level of risk that the Group is willing to assume in pursuit of its strategic objectives. It is determined by type of risk and by business line. It may be stated using either quantitative or qualitative criteria. Establishing risk appetite is one of the strategic management tools available to the Group’s decision-making bodies.
RISK-WEIGHTED ASSETS (RWA). Assets and risk commitments (loans, etc.) held by a bank weighted by a prudential factor and based on the risk of loss and used, when added together, as the denominator for various capital ratios.
RoTE, RETURN ON TANGIBLE EQUITY = RETURN ON EQUITY)*. Measures the return on tangible equity (the bank’s net assets restated to eliminate intangibles and goodwill).
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SHARE. A unit of ownership in a company entitling the owner — the shareholder — to a proportional share in any distribution of earnings or net assets and to vote on major corporate matters in general shareholders’ meetings.
SHAREHOLDERS’ EQUITY. Shareholders’ equity represents the resources belonging to the shareholders that are usually left permanently in the company (unlike liabilities, which have to be repaid). It comprises share capital, reserves, unrealised or deferred gains and losses, net income for the period and non-controlling interests in consolidated subsidiaries.
SINGLE RESOLUTION FUND (SRF). The SRF is a supranational fund built up by the banks of European Union member states since 2016 as part of the Single Resolution Mechanism (SRM), to help finance a resolution scheme in the event that a failing bank’s shareholders and creditors are unable to bear the full burden. Each bank’s contribution is based on its total liabilities minus own funds minus covered deposits and adjusted for its risk profile.
SOCIALLY RESPONSIBLE INVESTMENT (SRI). Systematic and clearly documented incorporation of environmental, social and governance criteria in investment decisions.
SOLVENCY. Measures the ability of a business or an individual to repay its debt over the medium to long term. For a bank, solvency reflects its ability to cope with the losses that its risk profile is likely to trigger. Solvency analysis is not the same as liquidity analysis. The liquidity of a business is its ability to honour its payments in the normal course of its business, to find new funding sources and to achieve a balance at all times between its incomings and outgoings. For banks, solvency is governed by the CRD 4 Directive and CRR Regulation. For an insurance company, solvency is covered by the Solvency 2 Directive (see Solvency 2).
SOLVENCY 2. European directive on insurance and reinsurance undertakings intended to ensure that they comply at all times with their commitments towards policyholders in view of the specific risks incurred by such businesses. It aims to achieve an economic and prospective assessment of solvency based on three pillars: quantitative requirements (Pillar 1), qualitative requirements (Pillar 2) and information for the public and the supervisor (Pillar 3). Adopted in 2014, it was transposed into national law in 2015 and came into force on 1 January 2016.
STRESS TEST. Exercise simulating extreme economic and financial conditions to study the ramifications on banks’ balance sheets, profit and loss, and on solvency in order to measure their ability to withstand these kinds of situations.
SYSTEMICALLY IMPORTANT BANK. Crédit Agricole Group is on the list of the 30 global systemically important banks (G-SIBs) published by the Financial Stability Board (FSB), updated every year. A systemically important bank has to put in place a basic capital buffer of between 1% and 3.5% in relation to Basel 3 requirements.
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TLAC (TLAC RATIO – TOTAL LOSS ABSORBING CAPACITY). Designed at the G20’s request by the Financial Stability Board, it aims to provide an indication of the loss-absorbing capacity and of the ability to raise additional capital of the systemically important banks (G-SIBs).
TREASURY SHARES. Shares held by a company in its own capital. Shares held in treasury do not carry a voting right and are not used in EPS calculations as they receive no dividend and have no right to reserves.
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UNDERTAKINGS FOR COLLECTIVE INVESTMENT IN TRANSFERABLE SECURITIES (UCITS). Underlying net income Group share corresponds to the stated Net income Group share less specific (non-recurring or exceptional).
UNDERLYING NET INCOME GROUP SHARE*. A UCITS is a portfolio of negotiable securities (equities, bonds, etc.) managed by professionals (management companies) and held collectively by retail or institutional investors. There are two types of UCITS
— SICAVs (open-ended investment companies) and FCPs (mutual investment funds).
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VAR – VALUE-AT-RISK. Synthetic indicator used to track on a day-to-day basis the market risks taken by the Group, particularly in its trading activities (VaR is calculated using a 99%-confidence interval, over ten days, in line with the regulatory internal model). Reflects the largest exposure obtained after eliminating 1% of the most unfavourable occurrences over a one-year history.
* Alternative performance indicator in accordance with Article 223-1 of the Autorité des Marchés Financiers (AMF.38) general regulations..
