Document ID: chunk:federal_register_of_legislation:F2022L01563:body:0:p3
Version: federal_register_of_legislation:F2022L01563
Segment Type: other
Provision Reference: 
Character Range: 5722–8640

the business indicator
14.         An ADI must calculate its BI as set out in paragraphs 15 to 22 of this Prudential Standard.
15.         The BI is calculated as follows:
where:
interest, leases and dividend component (ILDC) = the lesser of the interest component (as defined in paragraph 16) and the asset component (as defined in paragraph 17) plus the dividend component (as defined in paragraph 18); and
services component (SC) = the sum of the other operating component (as defined in paragraph 19) and the fee and commission component (as defined in paragraph 20); and
financial component (FC) = the sum of the trading book component (as defined in paragraph 21) and the banking book component (as defined in paragraph 22).
16.         For the purposes of paragraph 15 of this Prudential Standard, an ADI's interest component is the annual average value over the most recent three years of the absolute value of the following calculation:
(a)          the ADI's interest income from all financial assets and other interest income, including interest income from finance and operating leases and profits from leased assets, less
(b)          the ADI's interest expenses from all financial liabilities and other interest expenses, including interest expense from finance and operating leases, losses, depreciation and impairment of operating leased assets.
17.         For the purposes of paragraph 15 of this Prudential Standard, an ADI's asset component is 2.25 per cent times the average value over the most recent three years of the sum of the ADI's total gross outstanding loans (including non-performing loans), advances, interest bearing securities (including government bonds) and lease assets, measured at the end of each financial year.
18.         For the purposes of paragraph 15 of this Prudential Standard, an ADI's dividend component is the annual average over the most recent three years of the ADI's dividend income from investments in stocks and funds not consolidated in the ADI's financial statements, including dividend income from non-consolidated subsidiaries, associates and joint ventures.
19.         For the purposes of paragraph 15 of this Prudential Standard, an ADI's other operating component is the maximum of:
(a)          the annual average over the most recent three years of the ADI's other operating income and income not included in other BI components calculated according to paragraphs 15 to 22 of this Prudential Standard,[1] and
(b)          the annual average over the most recent three years of the ADI's other operating expenses and expenses not included in other BI components calculated in accordance with paragraphs 15 to 22 of this Prudential Standard.[2]
20.         For the purposes of paragraph 15 of this Prudential Standard, an ADI's fee and commission component is the maximum of:
(a)          the annual average over the most recent three years of the ADI's