- Type of Publication: Guideline
- Category: Accounting
- Date: October 2001
- Revised: July 2010
- No: C-5
- Audiences: Banks / FBB / T&L
This guideline outlines the regulatory framework for collective allowances
and should be considered in conjunction with Guideline C-1, Sound
Credit Risk Assessment and Valuation of Impaired Financial Instruments at
Amortized Cost. The guideline takes effect for fiscal years
commencing on or after January 1, 2011.
The guideline replaces the policy statement General Allowances for
Credit Risk issued October 2001 and subsequently revised in November
2007. It confirms the requirement that banks and trust and loan companies
maintain adequate collective allowances to recognize credit losses within
their portfolios in accordance with the International Accounting Standards
Board’s (IASB) International Financial Reporting Standards (IFRS).
The OSFI policy on assessing and valuing credit losses has evolved over
time. This guideline replaces the policy statement, General Allowances
for Credit Risk, issued October 2001 and subsequently revised in
November 2007. This updated guidance confirms the principles underlying
the establishment of allowances for financial instruments at amortized
cost in accordance with IAS 39 of the International Accounting Standard
Board’s International Financial Reporting Standards. This guideline
additionally provides direction on the methodology for developing
allowances and outlines OSFI’s process to assess an institution’s
collective allowance policy and associated methodologies.
The objectives of this guideline are to promote:
sound credit risk assessment and valuation policies and practices for
financial instruments at amortized cost;
risk management processes that are adequate and appropriate to the
the adoption by institutions of an active, anticipatory approach to
measuring and reporting risk and losses inherent in the portfolio;
calculations of collective allowances that clearly and accurately
reflect the loss within the portfolio; and
adequate disclosure of collective allowances and related accounts.
In accordance with the Basel Committee on Banking Supervision’s (BCBS)
Sound Credit Risk Assessment and Valuation for Loans Guideline issued in
June 2006, an institution should adopt and document a sound impairment
methodology, which addresses credit risk assessment policies, procedures
and controls for assessing credit risk, identifying problem debts and
determining allowances in a timely manner.
Experience has demonstrated that there is a period of time between when a
loss event occurs – that is, an event that results in a borrower’s
inability to repay interest and/or principal – and when management is able
to identify such an event. Accordingly, collective allowances for credit
risk must be established to recognize losses that management estimates to
have occurred in the portfolio at the balance-sheet date relating to
financial instruments at amortized cost not yet individually identified as
Collective allowances are not a substitute for individual allowances with
respect to individually significant instruments. Accordingly, as
individually significant amortized cost financial instruments are
identified as impaired, individual allowances are to be established.
Individual or collective allowances are to be established for financial
instruments that are not individually significant, in accordance with IAS
39.64. OSFI requires that institutions be able to demonstrate that the
level of both collective and individual allowances is adequate.
Historical evidence indicates that problem credits often originate in
periods of economic growth. Typically, as the business/economic cycle
peaks and begins to decline, more amortized cost financial instruments are
likely to become impaired. However, many problem credits will not become
individually identified as impaired until later when evidence of
impairment becomes more explicit.
Although a variety of methodologies may be appropriate for determining an
institution’s collective allowance, it is important to recognize these
dynamics when establishing the methodology for the collective allowance.
The balance of the collective allowance account is expected to increase to
reflect portfolio growth as at the balance sheet date and evidence of
deterioration in credit quality through the economic cycle. Since
collective allowances are influenced by the concurrent level of individual
allowances, there could be a counterbalancing impact on the level of the
collective allowance as individual allowances are identified. The extent
of this impact on the level of the collective allowance will depend on
many factors, including the growth in the portfolio, the change in the
credit profile of the portfolio, and the magnitude of the individual
During all points of an economic cycle, an institution must maintain a
level of collective allowance commensurate with the risk profile of the
institution’s portfolio. As collective and individual allowances are
related, it is necessary to review and assess regularly the adequacy of
collective allowances in light of developments within the portfolio.
This guideline applies to financial instruments classified at amortized
cost under IAS 39. While off balance sheet instruments are not within the
scope of this guideline, OSFI expects that an equally robust process would
be followed to support provisions for credit losses for off-balance sheet
exposures that are not at fair value such as certain guarantees and
bankers acceptances, letters of credit, undrawn commitments, and loan
substitutes. Provisions for credit losses for off- balance sheet exposures
are recorded in accordance with IAS 37 in other liabilities.
Financial instruments at amortized cost that are not individually
identified as impaired should be grouped on the basis of similar credit
risk characteristics that are indicative of the debtor’s ability to pay
all amounts due according to the contractual terms of the financial
instrument. To capture the extent of impairment fully, the collective
allowance must reflect amortized cost financial instruments across all
credit grades and an institution should have a system in place to reliably
classify these financial instruments on the basis of credit risk.
Elements of Collective Impairment
The assessment of impairment on a collective basis should be based on all
available and relevant information. An institution’s impairment
methodology is influenced by many factors, such as their sophistication,
business environment and strategy, portfolio characteristics,
administration procedures for financial instruments at amortized cost and
management information systems. However there are common elements an
institution should incorporate in its impairment methodology.
Collective impairments for groups of financial instruments at amortized
cost with similar credit risk characteristics must incorporate:
current and reliable data, management’s experienced credit judgements,
and all known relevant internal and external factors that may affect
collectibilty (such as industry, geographical, economic and political
historical loss experience or where institutions have no loss experience
of their own or insufficient experience, peer group experience for
comparable groups of financial instruments at amortized cost;
adjustments to historical loss experiences on the basis of current
observable data to
reflect the effects of current conditions. Changes in estimates of
future cash flows should be directionally consistent with changes in
underlying observable data;
adjustments to estimation method to reduce differences between estimates
of future cash flows and actual cash flows;
attributes specific to a defined group of borrowers;
other characteristics directly affecting the collectiblity of groups of
financial instruments at amortized cost and that are unique to a defined
group of borrowers within a credit grade; and
reasonable and supportable assumptions and adequate documentation.
An institution should have a realistic view of its lending activities and
adequately consider uncertainty and risks inherent in their activities in
preparing accounting estimates. Where the appropriate level of collective
allowance lies within a range of estimates, the best estimate within that
range should be chosen, in accordance with IAS 39.AG86.
Changes to the Collective Allowance
The level of collective allowance is expected to fluctuate in accordance
with the nature and composition of the institution’s portfolio, shifts in
the economic cycle and the effectiveness of the institution’s own credit
risk policies and procedures. Management must closely monitor changing
conditions and resulting impairments and reflect such changes through
increases or decreases in collective and individual allowances as
appropriate. Routine adjustments, which are consistent with the
institution’s methodology to establish the allowance, do not require
notification to OSFI.
Amounts will flow from collective to individual allowances. In normal
circumstances, transfers occur as individual allowances are established to
recognize impairment on an individual basis. A transfer from the
collective to the individual allowance is appropriate only to the extent
that the individual amortized cost financial instrument can be identified
with categories/subgroups of risk for which the collective allowance has
been established. The level of the residual collective allowance must
continue to be supported by the institution’s methodology to establish the
Increases and/or decreases to collective allowances are to be systematic
and rational and should be supported by observable changes/shifts in the
identified components of impairment. Changes in the collective allowance
should be directionally consistent with changes in the identified
components of impairment.
The methodology for establishing the level of collective allowances must
be supported by appropriate observable data. This data must be assessed
periodically as circumstances change or as new data, that are more
relevant and directly representative of losses, becomes available. If
changes in circumstances or improvements in the availability of data
result in material changes to the methodology for establishing collective
allowances, OSFI must be advised.
Where the condition/composition of an underlying portfolio has materially
changed, it will be appropriate for the institution to review the
components of impairment; this may, in turn, result in a
reassessment/recalibration of a portion of the collective allowance. OSFI
must be notified prior to a material, one-time adjustment of this type.
The institution would be expected to demonstrate that:
the circumstances under which an institution had previously established
its level of collective allowance have undergone material change; and
the adjustment is justified by the institution’s methodology to
establish the level of allowance.
There may also be instances when it is appropriate to realign the
collective allowance among categories/subgroups in order to reflect
specific events and/or to reflect better the underlying distribution of
risk. OSFI must be notified prior to a material adjustment of this type.
Furthermore, a material adjustment between portfolio segments would
trigger a review by the institution of its underlying methodology for
establishing the collective allowance.
In addition, OSFI expects that institutions establish and maintain a
materiality definition with respect to modifications to the following: its
methodology for establishing collective allowances and the level of
collective allowance. In arriving at a suitable assessment of materiality,
the institution should consider a combination of factors including impact
to systems, data, and processes, amongst other considerations. An
institution’s definition of materiality, and changes thereof, should be
approved by its Board of Directors. OSFI will review these materiality
definitions as part of its ongoing supervisory examination process and may
impose alternative definitions where the institution’s internal policy is
found to be deficient
Level of Collective Allowances
In accordance with the BCBS' Sound Credit Risk Assessment and Valuation
for Loans (SCRAVL) guideline, an institution’s aggregate amount of
individual and collectively assessed allowances should be adequate to
absorb estimated credit losses in the portfolio. OSFI expects that
impairment practices are robust and incorporate sound management
judgement. To these ends, the methodology for establishing collective
allowances should include establishing a level of collective allowances
that is reflective of the credit losses inherent in an institution’s risk
portfolio. An institution's use of experienced credit judgement and
reasonable estimates are an essential part of the recognition and
measurement of credit losses.
Historical loss experience may be limited or not fully relevant to current
circumstances; therefore management may be required to use its experienced
credit judgement to estimate the amount of any credit loss. For groups of
financial instruments at amortized cost that are collectively assessed for
impairment, estimated credit losses should reflect consideration of the
institution’s historical net charge-off rate adjusted upward or downward
for changes in trends, conditions and other relevant factors that affect
prepayment of the amortized cost financial instrument in these groups as
of the evaluation date.
As part of its credit risk assessment process, an institution should
develop and implement comprehensive procedures and information systems to
monitor the quality of its portfolios. These should include criteria that
identify and report problem amortized cost financial instruments to
reasonably assure that they are appropriately monitored as well as
administered and provided for. OSFI will require that institutions retain
on file sufficient documentation of their data and management judgements
to support their collective allowances.
Learnings from the financial crisis have shown that greater transparency
is necessary to instil market confidence. OSFI supports the concept of
market discipline and the role that quality disclosure plays in it. IFRS 7
and other sections of the International Financial Reporting Standards
(IFRS) contain a number of meaningful disclosure requirements on
collective allowances, impairments and related accounts.
In particular, IFRS 7.16 requires that where an allowance account is used
to record individual or collective impairments, a reconciliation is
provided of changes in that account during the period. While, IFRS may not
specifically require separate disclosure of individual and collective
allowances, OSFI believes that this is useful information for users of
financial statements and should help to ensure a stronger Pillar 3 (market
discipline) influence on institutions.
Accordingly, OSFI requires that institutions provide separate disclosure
of individual and collective allowances by providing a reconciliation of
changes to each of these accounts during the period.
Board and Senior Management
An institution’s board and senior management are responsible for ensuring
that the institution has appropriate credit risk assessment processes and
effective internal controls to consistently determine impairments in
accordance with the institution’s stated policies and procedures, the
applicable accounting framework and supervisory guidance. This includes
understanding and determining the nature and level of risk being taken by
the institution and how these risks relate to the level of collective and
individual allowances. They are also responsible for ensuring that the
level of formalization and sophistication of the risk management processes
are appropriate in light of the institution’s risk profile and business
The board of directors has responsibility for setting the institution’s
tolerance for risk. It should also ensure that management establishes a
measurement system for assessing risk, develops a system to relate risk to
the institution’s allowance levels, and establishes a method of monitoring
compliance with internal policies.
Management’s responsibilities for managing risk in the context of
collective allowances include, among other things:
monitoring and managing the quality of the risk portfolio;
ensuring that the risk portfolio is soundly and appropriately valued,
uncollectible credits written off, and expected or probable losses
adequately provided for;
exercising appropriate credit judgement to recognize the imprecision in
maintaining effective systems and controls for identifying, measuring,
monitoring, and addressing asset quality problems in a timely manner;
establishing documented policies and procedures for the determining and
maintaining of collective allowances;
providing appropriate disclosure; and
documenting its process for vetting both quantitative and qualitative
methods used in determining its collective allowance.
The Capital Adequacy Requirements (CAR) guidelines for federally regulated
deposit-taking institutions are based on the requirements set out in the
June 2006 Basel II Framework. The inclusion of collective allowances in
tier 2A capital, subject to the specified limits was based on the concept
that such “reserves” were freely available to meet losses not currently
identified. Within this framework, OSFI is prepared to permit collective
allowances to be included in tier 2A capital subject to the following
Qualifying collective allowances included in tier 2A capital may not
exceed 1.25 per cent of risk weighted assets for institutions using
the Standardized Approach.
Institutions approved to use the Internal Ratings Based (IRB) approach
are required to calculate an allowance excess or shortfall. Excess
allowances can be included in tier 2A capital up to a limit of the
lower of 0.6 per cent of IRB credit risk-weighted assets or the amount
of collective allowances. Refer to section 184.108.40.206 of the CAR A-1
As a temporary measure, institutions using IRB approaches may use the
proportional split method to allocate collective allowances between
portfolios carried on the Standardized Approach and portfolios carried
on an IRB approach. Refer to section 220.127.116.11 of the CAR A-1 Guideline.
The inclusion of collective allowances in capital is subject to the prior
written approval of OSFI. Approval is conditional on an institution
submitting a completed self-assessment of their methodology against the
criteria in Appendix I and being assessed as complying with this
guideline. This approval will be reviewed periodically as part of OSFI’s
ongoing supervisory process.
OSFI’s Assessment Process
OSFI will assess an institution’s compliance with this guideline by
evaluating an institution’s collective allowance policy and associated
methodologies and outcomes against the assessment criteria described
Assessment of Collective Allowance Policy and Associated Methodologies
As part of OSFI’s ongoing supervisory processes, supervisors will review
each institution’s collective allowance policy and methodology against the
principles outlined in this guideline to ensure that it has in place
appropriate criteria for measuring credit risk commensurate with the
complexity, size and diversity of its credit risk portfolios.
Annex 1 provides the criteria that OSFI will use to assess the adequacy of
the process used to establish the collective allowance. These criteria
have been designed to address the following main principles:
adequacy of corporate governance over the collective allowance process;
adequacy of methodology for establishing the estimate of credit losses
captured by the collective allowance including the integrity of the data
used in the estimate and the testing/verification of the output;
the relevance of the methodology and its calibration to the
institution’s historical loss experience, the nature and composition of
its current portfolio of credit risk, as well as the projected rate of
growth of the portfolio; and
integrity of the institution’s risk assessment and measurement processes
Conformity with the guideline implies being assessed as “Acceptable” on
the majority of the criteria. Even where the majority of criteria are
assessed as “Acceptable”, an overall assessment of “Not Acceptable” may be
given in circumstances where a weakness in an individual criterion is
deemed sufficiently serious to outweigh any “Acceptable” ratings.
As noted in Section F above, an institution must submit a self-assessment
of their methodology against the criteria in Appendix I where inclusion of
the collective allowance in capital is sought. Nevertheless, OSFI expects
that institutions will maintain an up-to-date self assessment for their
internal processes. As such, OSFI’s assessment process may include
reviewing an institutions completed self-assessment of their methodology.
Implications of Assessment
Institutions having a collective allowance methodology that is assessed as
“Not Acceptable” will be required to submit an action plan and timeline
for compliance with the guideline. Until such time as the institution
achieves an “Acceptable” or better rating, the institution may be subject
to enhanced monitoring of its risk management processes. Approval to
include collective allowances in tier 2A capital may be reduced below the
levels specified in section F of this Guideline or may be denied.
This guideline applies to all federally regulated deposit-taking
institutions, including those institutions that have not applied for
capital treatment of their collective allowance. It is, however,
recognized that there may be a limited number of federally regulated trust
companies with little exposure to credit risk and for which a collective
allowance may not be appropriate.
Foreign Bank Branches
Foreign bank branches are not separate legal entities but rather operating
units of authorized foreign banks, often large international banks. In
recognition of these unique characteristics, OSFI does not require
authorized foreign banks to maintain collective allowances for credit risk
on the books of their Canadian branch, although they may do so voluntarily
or where the Branch is seeking an audit opinion under IFRS.
Authorized foreign banks must, however, be able to demonstrate effective
risk management including:
a risk review system and control policies in conformity with OSFI’s
current framework on collective allowances for credit risk; and
adequate procedures for identifying latent losses believed to exist in
the branch’s risk portfolio but that cannot yet be ascribed to
individual risk assets.
OSFI’s supervisory approach for foreign bank branches is, in large
measure, predicated on regular communication with, and assessment of, the
home country supervisor and the foreign bank’s head office. As part of
this process, OSFI will have to satisfy itself, not only at the time of
application to establish a foreign bank branch, but also on an ongoing
basis after establishment, that collective allowances in the Canadian
branch are being maintained on a consolidated basis and that the
methodology supporting the collective allowances produces a reasonable and
prudent measurement, on a timely basis, in accordance with appropriate
policies and procedures. OSFI will expect the home bank to demonstrate and
disclose to OSFI the proportion of its collective allowance that is
allocated for the benefit of the Canadian branch. In addition, authorized
foreign banks will be required to maintain, locally, sufficient evidence
to support their assessment and management of risk associated with
business booked in Canada.
OSFI maintains the discretion to require the establishment of collective
allowances on the books of the Canadian branch where recommended as part
of the supervisory process in an attempt to address specific concerns or
issues. Collective allowances, including those established voluntarily,
should be reported as a segregation of a portion of its “due to related
depository institutions” accounts.
OSFI will begin assessing institutions against this guideline commencing
with the 2012 examination cycle for FREs adopting IFRS on January 1, 2011
and with the 2013 examination cycle for FREs adopting IFRS on November 1,
2011. Assessments will be carried out, over time, within the context of
the normal supervisory process.
- Criteria and Guidelines for Assessment of Collective Allowances
Evidence that the board of directors:
- has ensured that
appropriate credit risk assessment processes and internal controls
are in place to consistently determine impairments;
- has set
the institution’s tolerance for credit risk;
reviews appropriate information about the credit quality of the
institution’s portfolios on a timely basis;
- regularly reviews
portfolio quality reports and takes action as warranted;
reviews and approves the balance of the allowance for impairment;
- approves any material divergences between established
policies as documented and actual practice.
An approved Collective Allowance Policy
The policy should incorporate:
- procedures for the credit risk
systems and controls inherent in the methodology, including roles
and responsibilities of the institution’s board of directors and
- provides an explicit definition of the
- clearly outlines the concepts
underpinning the collective allowance, including the manner in which
the allowance is expected to operate;
- a well-defined review
process that is independent from the lending function;
clear description of the process/criteria used to determine
materiality of changes to collective allowance methodology and
- is regularly reviewed and approved by the board of
Periodic, independent reviews of the credit risk management
processes and the collective allowance methodology
Areas that should be reviewed include:
- the appropriateness of
the credit risk assessment processes as they relate to the
collective allowance and given the nature, scope and complexity of
the institution’s operations;
- the reasonableness, accuracy
and completeness of data inputs and parameters into the assessment
- the reasonableness of the collective allowance
- the reasonableness of data outputs;
adequacy of stress tests; and
- the adequacy of supporting
Findings are documented.
financial instruments to which credit risk grades are assigned
receive a periodic formal review to reasonably assure that those
grades are accurate and up to date.
Areas of weakness are
identified and addressed on a timely basis.
Design and Operation (Inputs/Methodology/Outputs)
The completeness and integrity of the data and parameters underlying
the collective allowance methodology can be supported/empirically
The institution considers all relevant and available data in its
methodology and in estimating key parameters and factors.
Institutions may have primary sources of information and use others
as points of comparison or potential adjustment.
comprehensive process to vet data inputs, including an assessment of
accuracy, completeness and suitability. Where the methodology relies
on historic data, the data should capture a full business cycle.
Where external data are employed as inputs into the collective
allowance methodology, the extent to which the data links reasonable
to the institution’s experience and the appropriateness of any
adjustments to the data.
Consistency of data over time
supporting the collective allowance methodology and the nature,
degree and appropriateness of any adjustments designed to compensate
for data deficiencies.
Recognition and resolution of structural data issues (for example,
the lag effect of historical measures, unstable transition matrices,
and the introduction of new products or inclusion of new markets).
Documentation of data issues including an analysis/assessment of the
impact on the accuracy/integrity of the collective allowance
Documentation of data exceptionality excluded from
inputs to calculations, and review of these exclusions in the
vetting of collective allowances.
Prudent use of expert credit
judgement where there are doubts about mapping to data sets or the
uncertainty in estimates is high.
Plans, where appropriate, to
address identified data issues.
The methodology used to calculate the collective allowance is
This includes such factors as:
An institution’s aggregate amount of individual and collectively
assessed allowances should be adequate to absorb estimated credit
losses in the portfolio.
- the methodology provides for
meaningful differentiation of risk in the context of the
institution’s portfolios and experience;
- there is an explicit
definition of “default” and “loss”; and
- the methodology is
based on management’s best estimate of losses in the current
portfolio and considers the maturity profile of the portfolio.
Credit exposure across all groups of financial instruments at
amortized cost is captured in the calculation of the collective
An institution must be able to demonstrate that an appropriate
component of the collective allowance corresponds to every net
amortized cost financial instrument.
The methodology provides that changes in risk will result in
appropriate changes in the collective allowance.
To achieve sensitivity to risk, the collective allowance methodology
will use data and parameters relevant to the differentiation of
risk; for example, segmentation by line of business, method of
distribution, rating class, etc.
Among others, the following
changes in an institution’s strategy or approach would be expected
to result in an increase in the estimate of the collective
Period-over-period changes in the
collective allowance are consistent with changes in portfolio risk.
- relaxation in the underwriting standards;
increasing sales of higher risk products or products with less
collateral or less robust risk mitigation; and
distribution methods, or increased distribution through channels
that result in higher losses.
The methodology provides for frequent and appropriate updates of the
The collective allowance is calculated at least quarterly. A change
control process exists to ensure that:
Procedures used by an institution to establish impairments should be
prudent and take into account criteria such as cash flow predictions
based on current assessments of economic conditions.
- the collective
allowance is calculated in a consistent fashion from period to
- changes are not made to the methodology except to
achieve an estimate that is better related to risk; and
effects of changes to the methodology are effectively disclosed.
The institution regularly compares assumptions/parameters used to
develop the collective allowance against experience.
Adjustments are made to the risk
management processes and the calculation of collective allowances as
indicated by review against experience.
- comparison of actual to
expected losses for major categories of amortized cost financial
- verification that segmentation and risk factors
used in risk management, particularly the calculation of collective
allowances, are supported by experience;
- comparison over an
- analysis of recent experience that considers
recent economic conditions; and
- consistent review over
portfolios and time. When new methods are introduced, the rationale
should be documented and results on both the new and old methodology
compiled over several years.
Regular stress/sensitivity tests of the collective allowance
Stress/sensitivity tests appropriate to the institution’s
methodology are conducted at regular intervals.
Stress/sensitivity tests incorporate both:
- normal and extreme
- immediate and longer term horizons.
results of stress/sensitivity tests are appropriately documented and
reported to senior management, and appropriate action is taken if
results exceed agreed tolerances.
Policies exist that require
remedial actions to be taken when tolerance levels are exceeded.
Consideration is given to uncertainty in the estimate of the
Risk Measurement and Assessment
The collective allowances methodology should be firmly grounded in
the institution’s process for meaningful differentiation of risk.
The parameters used in the estimate of the collective allowance
provide for a meaningful differentiation of risk.
exists that management is ensuring, on an ongoing basis, that the
risk rating system is operating properly.
The extent to which
the institution has a credible track record in the use/application
of internal ratings information. OSFI will consider internal and
external audit results, risk management reviews and the results of
OSFI’s supervision program in making this assessment.
The analysis of credit risk should adequately identify any
weaknesses at the portfolio level, including any concentrations of
Recognition, within the estimate of the collective allowance, of the
impact of concentrations and borrower interdependence.
- appropriate portfolio segmentation based on
underlying risk characteristics;
- identification, monitoring and
management of large exposures and risk concentrations.
Appropriate change control processes
A change control processes that stipulates the procedures to be
- before changing the collective allowance
- in response to review against experience; and
- as new products are sold, underwriting or distribution methods are
adopted, or other changes occur that are likely to affect the
institution’s risk profile.
Changes to methodology (including
data sources) are appropriately documented.
Credit risk ratings
are reviewed and updated whenever relevant new information is
The risk assessment processes used to arrive at an estimate for the
collective allowance must be integrated with other credit risk
measurement and management processes employed by the institution.
Data and assumptions used in the context of collective allowances
should be consistent with those used in processes such as:
The same information is used by
senior management to monitor the condition of the portfolio and in
the institution’s methodology for determining allowances for credit
risk assessment, accounting and capital adequacy purposes.
customer or portfolio profitability analysis; and
adjusted return on capital.