Financial institutions (discontinued), Q3 2007

Definition of the main terms

Financial institution: Company, enterprise or other institution engaged in financial intermediation. Includes under current legislation: commercial banks, savings banks, insurance companies, mortgage and finance companies. Under this definition, Statistics Norway also includes state lending institutions and Norges Bank in published statistics.

Brief description of the various financial institutions:

Norges Bank: Norway's central bank with advisory, executive and controlling functions associated with foreign exchange, monetary and credit policy.

Commercial banks incl. the Postal Bank and savings banks: The banks are primarily involved in lending money, but also have operations covering credit procurement, payments transfers, foreign exchange transactions and management of funds.

Finance corporations: A group term for financial institutions outside banks, insurance companies and state lending institutions that are permitted to conduct financial activities pursuant to the Financial Institutions Act. The main division runs between the bond-issuing mortgage companies and other companies called finance companies.

State lending institutions: State lending institutions issue loans, subsidies and guarantees to various prioritized purposes and groups based on political criteria and goals. The loans are often offered at borrower-friendly terms with respect to interest rates, payments and collateral.

Insurance companies: The primary job of insurance companies is to distribute risk among policyholders and to a certain extent transfer risk from the customers to themselves.

Definitions of the main variables

Balance sheet: The balance sheet shows assets, liabilities and equity at the end of the financial year.

Profit and loss account: Shows income, costs and expenses over the course of the calendar year.

Total assets: This is the same as a bank's balance sheet, i.e., the sum of liabilities and equity.

Loan market: The loan market means the market for loans from financial institutions to the public, defined as households, non-financial corporations and local government and lending between the financial institutions.

Funding: Describes in general the placement of money in a credit institution that is obligated to repay the money on request or after a certain period of notice. Is also frequently used to describe the institution's financing in the form of issues of certificates and bonds.

Deposit: Is used to describe both the individual amount that is deposited and the overall amount credited to one person in a specific account in a bank. There are two types of deposits, those withdrawn without notice (sight deposits) and those where a certain period of notice is in effect (time deposits).

Interest: Interest is the cost of using another's capital. It is calculated for a certain period of time, usually one year and is expressed as a percentage. Lending rate is the interest rate banks and other lending institutions take for loans. Deposit rate is the interest rate banks pay for deposits from the public. The interest margin is the difference between lending and deposit rate.

Net interest income: Total interest income less total interest costs.

Money market rate: Interest on loans and placement in the money market. In the money market, interest rates on loans/placements are noted with a term from one day to 12 months.

Money supply: A measure of the public's (local government, business and households and financial institutions outside banks) stocks of funds which without significant cost may be used at short notice.

We have four types of classifications: instrument, sector, industry and type:

Financial instruments and physical capital: Liabilities, claims and other assets in the balance sheet of the financial institutions are divided into two main groups with a view to providing major uniform groups such as bank lending, funding and deposits.

Debtor and creditor sector: Borrowers and lenders are classified according to institutional sector classification, based on national accounts rules.

Debtor and creditor industry: Based on the rules in the industry standard, the individual financial instruments are grouped according to the debtor's or creditor's industry affiliation.

Types of income and expenses, including interest income and expenses, are based on national accounts rules.