Section B: Non-performing exposuresSection B: Non-performing exposures

Start here

Get a plain-English read of Section B: Non-performing exposures

Turn the raw legal text into a practical explanation grounded in Financial Sector (Collection of Data) (reporting standard) determination No. 5 of 2022.

Reporting Form ARF 220.0

Credit Quality

Instructions

Reporting level

This form is to be completed by all authorised deposit-taking institutions (ADIs) on both a licensed ADI and consolidated ADI group basis (where applicable).

Foreign ADIs operating through branches in Australia are required to complete this form for the Australian branch only.

Securitisation deconsolidation principle

Except as otherwise specified in these instructions, the following applies:

Where an ADI (or a member of its Level 2 consolidated group) participates in a securitisation that meets APRA’s operational requirements for regulatory capital relief under Prudential Standard APS 120 Securitisation (APS 120):

(a) special purpose vehicles (SPVs) holding securitised assets may be treated as non-consolidated independent third parties for regulatory reporting purposes, irrespective of whether the SPVs (or their assets) are consolidated for accounting purposes;

(b) the assets, liabilities, revenues and expenses of the relevant SPVs may be excluded from the ADI’s reported amounts in APRA’s regulatory reporting returns; and

(c) the underlying exposures (i.e. the pool) under such a securitisation may be excluded from the calculation of the ADI’s regulatory capital (refer to APS 120). However, the ADI must still hold regulatory capital for the securitisation exposures[1] that it retains or acquires and such exposures are to be reported in Reporting Form ARF 120.1 Securitisation – Regulatory Capital. The risk-weighted assets (RWA) relating to such securitisation exposures must also be reported in Reporting Form ARF 110.0.1 Capital Adequacy (Level 1) and Reporting Form ARF 110.0.2 Capital Adequacy (Level 2).

Where an ADI (or a member of its Level 2 consolidated group) participates in a securitisation that does not meet APRA’s operational requirements for regulatory capital relief under APS 120, or the ADI undertakes a funding-only securitisation or synthetic securitisation, such exposures are to be reported as on-balance sheet assets in APRA’s regulatory reporting returns. In addition, these exposures must also be reported as a part of the ADI’s total securitised assets within Reporting Form ARF 120.2 Securitisation – Supplementary Items.

Reporting basis and units of measurement

Reporting Category B ADIs are to report amounts in millions of Australian dollars rounded to one decimal place, and Reporting Category A ADIs, in whole Australian dollars (no decimal place).

Amounts denominated in foreign currency are to be converted to AUD in accordance with AASB 121 The Effects of Changes in Foreign Exchange Rates (AASB 121).

>=90 days past-due	An exposure subject to a regular repayment schedule is considered 90 days past-due when:at least 90 calendar days have elapsed since the due date of a contractual payment which has not been met in full; andthe total amount unpaid outside contractual arrangements is equivalent to at least 90 days’ worth of contractual payments. This includes all fees and any charges that are due but unpaid as a result of missed payments.Overdrafts are considered past-due once the borrower has breached an advised limit or been advised of a limit smaller than current outstandings. Non-authorised overdrafts are considered to have a zero limit for regulatory capital purposes. An ADI must, therefore, treat days past-due as commencing once any credit is granted to an unauthorised borrower and if such credit is not repaid within 90 days, the exposure must be considered to be in default.
Community service organisations (CSOs)	Include:institutions financed mostly by members’ contributions, e.g. trade unions, professional societies, consumer associations, political parties, churches and religious societies, and social, cultural, recreational and sports clubs; andcharities and aid organisations financed by voluntary transfers.Exclude:CSOs and non-profit institutions controlled and mainly financed by government (record as other).
Credit cards	Credit cards are a common consumer credit arrangement that allows the consumer the option of borrowing against a pre‑approved line of credit. They are typically unsecured.
Financial corporations	Means ADIs, RFCs, insurance corporations, pension funds, and other financial institutions.
Households	This comprises individuals, or groups of individuals, resident in Australia whose dealings with other sectors are for personal or household purposes.Exclude sole proprietors, partnerships, family trusts, and any other unincorporated enterprises owned by households (record as private unincorporated businesses).
Housing (loans)	Means facilities, both amortising and line of credit that are primarily secured by a registered mortgage over a residential property. They may be for any purpose including the construction, purchase of dwellings for owner occupation or investment or commercial ventures.
Individually managed	These are troublesome exposures that are managed on a transaction basis and typically subject to individual review.
Insurance corporations	Means general insurers within the meaning of the Insurance Act 1973 and life companies within the meaning of the Life Insurance Act 1995, and private health insurers within the meaning of the Private Health Insurance (Prudential Supervision) Act 2015.Include:friendly societies that are regulated under the Life Insurance Act 1995; andExport Finance Insurance Corporation despite it not being a general insurer, life company or private health insurer.
Lease financing	Lease financing is a method of financing the acquisition of an asset (e.g. motor vehicle or business equipment) by the user under which the ADI buys the asset from a third party and leases it to the user in return for lease rental payments. A component of the lease rental payment relates to interest and another component to the reduction of principal.
Non-financial corporations	This comprises private trading corporations and private unincorporated businesses.
Non-performing	As defined in Prudential Standard APS 220 Credit Risk Management (APS 220).
Non-resident	A non-resident is any individual, business or other organisation domiciled overseas. Foreign branches and foreign subsidiaries of Australian businesses are regarded as non-residents.
Not well-secured	An exposure that is for which the ADI judges that the fair value of associated security, discounted to allow for reasonable realisation costs, is not sufficient to cover payment of principal and any accrued interest.
Other (sector classification)	This comprises all other entities not classified as households, CSOs, non-financial corporations, or financial corporations.
Other financial institutions	The other financial institutions sector includes all financial institutions not recorded in the above financial corporation categories.Include:financial auxiliaries such as fund managers as principal, stock brokers and insurance brokers;securitisers;mortgage, fixed interest and equity unit trusts;economic development corporations owned by governments;co-operative housing societies;other financial corporations registered under the Financial Sector (Collection of Data) Act 2001 Category J;investment companies; andcommon funds including cash common funds.Exclude:cash management trusts (record as RFCs); andproperty and trading trusts (record as private trading corporations).
Other loans	Means loans that are not revolving credit, credit cards, housing loans, term loans, or lease financing.
Past-due	As defined in APS 220.
Pension funds	The pension funds sub-sector includes all superannuation funds that are regarded as complying funds for the purposes of the Superannuation Industry (Supervision) Act 1993 and other autonomous funds established for the benefit of public sector employees. Superannuation funds with all of their assets invested with insurance offices are included.Superannuation funds and approved deposit funds (ADFs) are established to provide benefits for their members on retirement, resignation, death or disablement. Superannuation funds and ADFs usually take the legal form of trust funds.Include:Pooled Superannuation Trusts;public sector superannuation funds (including SIS-exempt funds);private sector superannuation funds;ADFs; andsuperannuation funds established by life insurance companies.Exclude:retirement savings accounts.
Portfolio managed	Exposures managed on a portfolio basis are typically homogenous and often approved and managed using statistical management techniques. Portfolio managed exposures are often not subject to formal regular review other than in cases where payments are behind agreed repayment schedules or indebtedness is outside approved limits.
Private trading corporations	Private trading corporations are those owned and controlled by the private sector whose main activity is producing goods or non-financial services for sale.Include:all resident private corporate trading enterprises, and non-profit institutions that are market producers of goods or non-financial services;intra-group financiers (Financial Sector (Collection of Data) Act 2001 category I), retailers (Financial Sector (Collection of Data) Act 2001 category H) and parent companies with significant holdings of shares in private trading companies;privately owned schools and hospitals;any unincorporated unit that is a branch in Australia of a non-resident company and which is not included in the financial sector; andany unincorporated business owned and operated by trading corporations (e.g. joint ventures).Exclude:unincorporated businesses, except for branches of non-resident companies and joint ventures or partnerships owned by corporations; andnon-resident enterprises.
Private unincorporated businesses	This comprises individuals acting as sole proprietors or in partnerships, for commercial or professional purposes. The major businesses to be included in this sub-sector are unincorporated farms, unincorporated retailers, unincorporated professional practices (medical, legal, dental, accounting, etc.), unincorporated businesses of tradesmen such as plumbers, carpenters, etc.
Registered financial corporations (RFCs)	Means corporations registered under the Financial Sector (Collection of Data) Act 2001 that are classified to Categories D through G and cash management trusts.Include:money market corporations (also referred to as merchant banks) (D);pastoral finance companies I;finance companies (F);general financiers (G); andcash management trusts.Exclude:intra group financiers and retailers registered under the Financial Sector (Collection of Data) Act 2001 Categories H and I (record as private trading corporations); andother financial corporations registered under the Financial Sector (Collection of Data) Act 2001 Category J (record as other financial institutions).
Resident	An Australian resident is any individual, business or other organisation domiciled in Australia. Australian branches and Australian subsidiaries of foreign businesses are regarded as Australian residents.
Restructured	As defined in APS 220.
Revolving credit	Means a credit facility that is typically approved for a given period of time but does not have a fixed repayment schedule.Exclude loans to Australian householders for the purpose of housing (e.g. equity lines of credit secured by residential property). Facilities of this nature should be reported under housing loans.
Stage 2	The impairment stage where provisions on exposures are calculated on a lifetime expected credit loss basis but are not credit impaired in accordance with AASB 9 Financial Instruments (AASB 9).
Term loans	Means loans that have a fixed term. Exclude loans to householders for the purpose of housing.
Unsecured	An exposure for which there is no associated security.
Well-secured	An exposure for which the ADI judges that the fair value of associated security, discounted to allow for reasonable realisation costs, is sufficient to cover payment of principal and any accrued interest.Prescribed provisioning ADIs must refer to Attachment B of APS 220 for the purposes of defining well-secured when reporting.

>=90 days past-due

An exposure subject to a regular repayment schedule is considered 90 days past-due when:at least 90 calendar days have elapsed since the due date of a contractual payment which has not been met in full; andthe total amount unpaid outside contractual arrangements is equivalent to at least 90 days’ worth of contractual payments. This includes all fees and any charges that are due but unpaid as a result of missed payments.Overdrafts are considered past-due once the borrower has breached an advised limit or been advised of a limit smaller than current outstandings. Non-authorised overdrafts are considered to have a zero limit for regulatory capital purposes. An ADI must, therefore, treat days past-due as commencing once any credit is granted to an unauthorised borrower and if such credit is not repaid within 90 days, the exposure must be considered to be in default.

Community service organisations (CSOs)

Include:institutions financed mostly by members’ contributions, e.g. trade unions, professional societies, consumer associations, political parties, churches and religious societies, and social, cultural, recreational and sports clubs; andcharities and aid organisations financed by voluntary transfers.Exclude:CSOs and non-profit institutions controlled and mainly financed by government (record as other).

Credit cards

Credit cards are a common consumer credit arrangement that allows the consumer the option of borrowing against a pre‑approved line of credit. They are typically unsecured.

Financial corporations

Means ADIs, RFCs, insurance corporations, pension funds, and other financial institutions.

Households

This comprises individuals, or groups of individuals, resident in Australia whose dealings with other sectors are for personal or household purposes.Exclude sole proprietors, partnerships, family trusts, and any other unincorporated enterprises owned by households (record as private unincorporated businesses).

Housing (loans)

Means facilities, both amortising and line of credit that are primarily secured by a registered mortgage over a residential property. They may be for any purpose including the construction, purchase of dwellings for owner occupation or investment or commercial ventures.

Individually managed

These are troublesome exposures that are managed on a transaction basis and typically subject to individual review.

Insurance corporations

Means general insurers within the meaning of the Insurance Act 1973 and life companies within the meaning of the Life Insurance Act 1995, and private health insurers within the meaning of the Private Health Insurance (Prudential Supervision) Act 2015.Include:friendly societies that are regulated under the Life Insurance Act 1995; andExport Finance Insurance Corporation despite it not being a general insurer, life company or private health insurer.

Lease financing

Lease financing is a method of financing the acquisition of an asset (e.g. motor vehicle or business equipment) by the user under which the ADI buys the asset from a third party and leases it to the user in return for lease rental payments. A component of the lease rental payment relates to interest and another component to the reduction of principal.

Non-financial corporations

This comprises private trading corporations and private unincorporated businesses.

Non-performing

As defined in Prudential Standard APS 220 Credit Risk Management (APS 220).

Non-resident

A non-resident is any individual, business or other organisation domiciled overseas. Foreign branches and foreign subsidiaries of Australian businesses are regarded as non-residents.

Not well-secured

An exposure that is for which the ADI judges that the fair value of associated security, discounted to allow for reasonable realisation costs, is not sufficient to cover payment of principal and any accrued interest.

Other (sector classification)

This comprises all other entities not classified as households, CSOs, non-financial corporations, or financial corporations.

Other financial institutions

The other financial institutions sector includes all financial institutions not recorded in the above financial corporation categories.Include:financial auxiliaries such as fund managers as principal, stock brokers and insurance brokers;securitisers;mortgage, fixed interest and equity unit trusts;economic development corporations owned by governments;co-operative housing societies;other financial corporations registered under the Financial Sector (Collection of Data) Act 2001 Category J;investment companies; andcommon funds including cash common funds.Exclude:cash management trusts (record as RFCs); andproperty and trading trusts (record as private trading corporations).

Other loans

Means loans that are not revolving credit, credit cards, housing loans, term loans, or lease financing.

Past-due

As defined in APS 220.

Pension funds

The pension funds sub-sector includes all superannuation funds that are regarded as complying funds for the purposes of the Superannuation Industry (Supervision) Act 1993 and other autonomous funds established for the benefit of public sector employees. Superannuation funds with all of their assets invested with insurance offices are included.Superannuation funds and approved deposit funds (ADFs) are established to provide benefits for their members on retirement, resignation, death or disablement. Superannuation funds and ADFs usually take the legal form of trust funds.Include:Pooled Superannuation Trusts;public sector superannuation funds (including SIS-exempt funds);private sector superannuation funds;ADFs; andsuperannuation funds established by life insurance companies.Exclude:retirement savings accounts.

Portfolio managed

Exposures managed on a portfolio basis are typically homogenous and often approved and managed using statistical management techniques. Portfolio managed exposures are often not subject to formal regular review other than in cases where payments are behind agreed repayment schedules or indebtedness is outside approved limits.

Private trading corporations

Private trading corporations are those owned and controlled by the private sector whose main activity is producing goods or non-financial services for sale.Include:all resident private corporate trading enterprises, and non-profit institutions that are market producers of goods or non-financial services;intra-group financiers (Financial Sector (Collection of Data) Act 2001 category I), retailers (Financial Sector (Collection of Data) Act 2001 category H) and parent companies with significant holdings of shares in private trading companies;privately owned schools and hospitals;any unincorporated unit that is a branch in Australia of a non-resident company and which is not included in the financial sector; andany unincorporated business owned and operated by trading corporations (e.g. joint ventures).Exclude:unincorporated businesses, except for branches of non-resident companies and joint ventures or partnerships owned by corporations; andnon-resident enterprises.

Private unincorporated businesses

This comprises individuals acting as sole proprietors or in partnerships, for commercial or professional purposes. The major businesses to be included in this sub-sector are unincorporated farms, unincorporated retailers, unincorporated professional practices (medical, legal, dental, accounting, etc.), unincorporated businesses of tradesmen such as plumbers, carpenters, etc.

Registered financial corporations (RFCs)

Means corporations registered under the Financial Sector (Collection of Data) Act 2001 that are classified to Categories D through G and cash management trusts.Include:money market corporations (also referred to as merchant banks) (D);pastoral finance companies I;finance companies (F);general financiers (G); andcash management trusts.Exclude:intra group financiers and retailers registered under the Financial Sector (Collection of Data) Act 2001 Categories H and I (record as private trading corporations); andother financial corporations registered under the Financial Sector (Collection of Data) Act 2001 Category J (record as other financial institutions).

Resident

An Australian resident is any individual, business or other organisation domiciled in Australia. Australian branches and Australian subsidiaries of foreign businesses are regarded as Australian residents.

Restructured

As defined in APS 220.

Revolving credit

Means a credit facility that is typically approved for a given period of time but does not have a fixed repayment schedule.Exclude loans to Australian householders for the purpose of housing (e.g. equity lines of credit secured by residential property). Facilities of this nature should be reported under housing loans.

Stage 2

The impairment stage where provisions on exposures are calculated on a lifetime expected credit loss basis but are not credit impaired in accordance with AASB 9 Financial Instruments (AASB 9).

Term loans

Means loans that have a fixed term. Exclude loans to householders for the purpose of housing.

Unsecured

An exposure for which there is no associated security.

Well-secured

An exposure for which the ADI judges that the fair value of associated security, discounted to allow for reasonable realisation costs, is sufficient to cover payment of principal and any accrued interest.Prescribed provisioning ADIs must refer to Attachment B of APS 220 for the purposes of defining well-secured when reporting.

Column 1	Report the total exposure for exposures recorded in Australia.
Column 2	Report total provisions for exposures recorded in Australia. This should include the credit loss reserve held as part of retained earnings.
Column 3	Report the total exposure for exposures recorded overseas.
Column 4	Report total provisions for exposures recorded overseas. This should include the credit loss reserve held as part of retained earnings.

Item 1.1.1	Report well-secured >=90 days past-due exposures
Item 1.1.2	Report not well-secured or unsecured >=90 days past-due exposures.
Item 1.2.1	Report well-secured Stage 2 exposures.
Item 1.2.2	Report not well-secured or unsecured Stage 2 exposures.
Item 1.3.1	Report well-secured non-performing exposures.
Item 1.3.2	Report not well-secured or unsecured non-performing exposures.
Item 1.4	Report total restructured exposures.

Item 2.1.1	Report non-performing exposures to households.Item 2.1.1 is a derived item and is calculated as the sum of items 2.1.1.1 to 2.1.1.4.
Item 2.1.1.1	Report non-performing owner-occupied housing exposures.
Item 2.1.1.2	Report non-performing investor housing exposures.
Item 2.1.1.3	Report non-performing credit card exposures.
Item 2.1.1.4	Report non-performing other personal exposures.
Item 2.1.2	Report non-performing exposures to CSOs.
Item 2.1.3	Report non-performing exposures to non-financial corporations.Item 2.1.3 is a derived item and is calculated as the sum of item 2.1.3.1 and 2.1.3.2.
Item 2.1.3.1	Report non-performing exposures to private trading corporations.
Item 2.1.3.2	Report non-performing exposures to private unincorporated business.
Item 2.1.4	Report non-performing exposures to financial corporations.Item 2.1.4 is a derived item and is calculated as the sum of items 2.1.4.1 to 2.1.4.5 inclusive.
Item 2.1.4.1	Report non-performing exposures to ADIs.Include:development banks even if they are not authorised to carry on banking business under the Banking Act 1959.Exclude:merchant banks (record as RFCs); andnon-resident banks (record as resident counterparties).
Item 2.1.4.2	Report non-performing exposures to RFCs.
Item 2.1.4.3	Report non-performing exposures to insurance corporations.
Item 2.1.4.4	Report non-performing exposures to pension funds.
Item 2.1.4.5	Report non-performing exposures to other financial institutions.
Item 2.1.5	Report non-performing exposures to other counterparties.
Item 2.2	Report non-performing exposures to non-residents.
Item 2.3	Report total non-performing exposures.Item 2.3 is a derived item and is calculated as the sum of items 2.1.1 to 2.1.5 inclusive and item 2.2.

Column 1	Report the total exposure for exposures that are >=90 days past-due and well-secured recorded in Australia.
Column 2	Report the total exposure for exposures that are >=90 days past-due and well-secured recorded overseas.
Column 3	Report the total portfolio size for exposures recorded in Australia.
Column 4	Report the total portfolio size for exposures recorded overseas.
Column 5	Report total provisions for exposures recorded in Australia.
Column 6	Report total provisions for exposures recorded overseas.

Item 3.1	Report revolving credit facilities.
Item 3.2	Report credit card facilities.
Item 3.3	Report housing loan facilities.
Item 3.4	Report term loan facilities.
Item 3.5	Report lease financing facilities.
Item 3.6	Report other loan facilities.

Section B: Non-performing exposuresSection B: Non-performing exposures

Get a plain-English read of Section B: Non-performing exposures

Instructions

Definitions

Section A: Credit Quality

Section B: Non-performing exposures

Item 2. Non-performing exposures

Section C: >=90 days past-due well-secured items

Item 3. Individually managed facilities

Item 4. Portfolio managed facilities

Item 5. Provisions for well-secured portfolio managed credit exposures 1 to 89 days past-due

Section D. >=90 days past-due items

Item 4.1	Report revolving credit facilities.
Item 4.2	Report credit card facilities.
Item 4.3	Report housing loan facilities.
Item 4.4	Report term loan facilities.
Item 4.5	Report lease financing facilities.
Item 4.6	Report other loan facilities.

Item 6.1.1	Report >=90 days past-due exposures to households.Item 6.1.1 is a derived item and is calculated as the sum of items 6.1.1.1 to 6.1.1.4.
Item 6.1.1.1	Report >=90 days past-due owner-occupied housing exposures.
Item 6.1.1.2	Report >=90 days past-due investor housing exposures.
Item 6.1.1.3	Report >=90 days past-due credit card exposures.
Item 6.1.1.4	Report >=90 days past-due other personal exposures.
Item 6.1.2	Report >=90 days past-due exposures to CSOs.
Item 6.1.3	Report >=90 days past-due exposures to non-financial corporations.Item 6.1.3 is a derived item and is calculated as the sum of item 6.1.3.1 and 6.1.3.2.
Item 6.1.3.1	Report >=90 days past-due exposures to private trading corporations.
Item 6.1.3.2	Report >=90 days past-due exposures to private unincorporated business.
Item 6.1.4	Report >=90 days past-due exposures to financial corporations.Item 6.1.4 is a derived item and is calculated as the sum of items 6.1.4.1 to 6.1.4.5 inclusive.
Item 6.1.4.1	Report >=90 days past-due exposures to ADIs.Include:development banks even if they are not authorised to carry on banking business under the Banking Act 1959.Exclude:merchant banks (record as RFCs); andnon-resident banks (record as resident counterparties).
Item 6.1.4.2	Report >=90 days past-due exposures to RFCs.
Item 6.1.4.3	Report >=90 days past-due exposures to insurance corporations.
Item 6.1.4.4	Report >=90 days past-due exposures to pension funds.
Item 6.1.4.5	Report >=90 days past-due exposures to other financial institutions.
Item 6.1.5	Report >=90 days past-due exposures to other counterparties.
Item 6.2	Report >=90 days past-due exposures to non-residents.
Item 6.3	Report total >=90 days past-due exposures.Item 6.3 is a derived item and is calculated as the sum of item 6.1 and item 6.2.