Explanatory Notes - Write-offs and other revaluations of loans by banks and building societies
OVERVIEW
AVAILABILITY
SOURCES
DEFINITIONS
VALUATIONS AND BREAKS
FURTHER INFORMATION
OVERVIEW
Write-offs are changes in the value of an institution’s assets resulting from the institution’s active decisions to revalue claims. These cover primarily full or partial write-offs of loans, as well as the value of any discounts when disposing of other assets at a discount to book value.
Data are available quarterly and annually from 1993 onwards. The full breakdown for National Account sectors is also available from 1993, although two of the splits were initially based on estimates. Data for write-offs of loans secured on dwellings prior to Q3 1997 are estimates, not based on Bank of England statistical forms, and write-offs of loans to unincorporated businesses are based on estimates until Q4 1994, when they began to be collected formally.
The data are not seasonally adjusted. Publication of data will usually occur on the 21st working day of the second month following the quarter end, in Table C2.1 in Monetary and Financial Statistics (Bankstats), or subject to the published schedule of releases.
SOURCES
Since 2008, the data are sourced quarterly from the Bank of England’s WO form, with credit-card write-offs collected monthly on the IC form. The WO form is reported by any bank or building society making more than £10mn write-offs over the previous year. The data are not grossed up to account for non-reporting banks and building societies, because of the irregular nature of write-offs. The institutions that do report the data account for 70% of total lending by UK monetary financial institutions to other UK residents.
Between 1993 and 1997 the data were sourced quarterly from the Bank of England’s Q1(R) form, and between 1997 and 2007 they were collected quarterly on the QX form. Credit card write-offs were available monthly from the Q1(D) form (which was replaced by the IC form from October 2007 onwards), but were published quarterly along with the other data.
On the QX form, around 220 banks were required to report their total write-offs to UK residents and non-residents every quarter, and the sectoral breakdown of write-offs to UK residents at the end of every year. Some banks, whose write-offs exceeded a certain threshold, had to report additional quarterly splits. Where banks did not report a quarterly breakdown, their data from the previous year were used to allocate the reported total to the various sectors. The data were then revised at the end of the year when the full split became available.
All data are subject to revision if and when new information becomes available. For more information on revisions practices see the Explanatory Note on revisions.
DEFINITIONS
The data in Table C2.1 relate to lending by UK banks and building societies only, and do not cover loans by other lenders. Prior to 2008, the data only covered write-offs by UK banks.
“Write-offs” do not include provisions against bad debts, or impairment charges, although it is likely that most loans written off will have been provided for previously.
The sectoral breakdown of write-offs is consistent with the definitions used for the Sectoral Analysis of M4 and M4 Lending. Within the Individuals category, the “other” category relates to unsecured lending other than credit card lending to individuals, and so mainly involves unsecured personal loans.
The article “UK banks’ write-offs of bad debt” explains how write-offs data are used to adjust lending flows.
Building societies' statistical reporting transitioned from the Financial Services Authority to the Bank of England on 1st January 2008. Write-offs by building societies are therefore included in Table C2.1 from Q1 2008 onwards. Prior to this, Table C2.1 included only write-offs by banks.
FURTHER INFORMATION
For further information see the following article:
O’Connor, P (2008), ‘Transition of building society statistical reporting’, Monetary and Financial Statistics, January.
Cattermole, A (2004)UK banks’ write-offs of bad debt - Monetary and Financial Statistics, September 2004, pages 1-4
