Glossary of terms

Approvals (Commitments) - Approvals indicate the value of mortgage loan applications which have newly proceeded to the stage where a satisfactory property valuation has been obtained and the society has agreed in principle to lend. The advance of mortgage money depends only on the satisfactory conclusion of legal processes.

Approvals Outstanding (Commitments Outstanding) - The total stock of approvals, net of cancellations, which have been granted but not yet advanced at the end of the period. The figure includes approvals made in the last period.

Financial Ratios/Percentages - Every building society must present in the annual business statement section of its annual report and accounts (and summary statement) various percentages. These are set out in the Building Societies (Accounts and Related Provisions) Regulations 1998. While the information these percentages provide is identical, part of their calculation may differ slightly - some, mainly larger, societies prepare their accounts using international financial reporting standards while others follow UK accounting convention (known as UK GAAP).

Funding Limit - Represents shares and borrowings not in the form of shares held by individuals. The statutory limit is 50%.

Gross Advances - The total value of residential mortgage loans advanced by societies in period, including loans for house purchase, further advances, remortgages etc.

Gross Capital as a Percentage of Shares and Borrowings - A ratio that gives an indication of the extent to which a Society is funded by retained earnings compared with shares and borrowings. Gross capital provides a buffer against any losses which might arise from the Society's activities and therefore protects investors.

Lending Limit - Represents the proportion of business assets not in the form of loans fully secured on residential property. The statutory limit is 25%.

Liquid Assets as a Percentage of Shares and Borrowings - A ratio that measures the proportion of a Society's shares and borrowings which are held either in the form of cash or readily convertible into cash.

Management Expenses as a Percentage of Mean Total Assets - This represents one of the measure of efficiency.

Mortgage Lending - Loans to individuals, housing associations, companies etc. fully secured on residential property.

Net Advances (Net Lending) - Gross advances less (ie net of) repayments of principle, this represents an approximate measure of the increase/decrease in total mortgage balances outstanding.

Profit for the Year as a Percentage of Mean Total Assets - This represents the amount of profit that the Society's assets have generated in the year. Societies need to make a level of profit each year sufficient to maintain adequate capital within the business to facilitate future growth .

Repayments of Principal - The amount of residential mortgage borrowing repaid to societies in period. Repayments may be full redemptions where a loan has been held to maturity and then repaid in full (often with the proceeds from an endowment or other investment vehicle) or been refinanced in some way (eg with a mortgage), lump-sum payments which reduce but do not eradicate the outstanding mortgage debt, or regular payments of capital.

Retail Funds - Shares and deposits held by individuals

Wholesale Funds - Deposits from companies, bank borrowing, certificates of deposit, commercial paper, bonds and notes etc.