Currently, QA 2014_1249 clarifies that for credit institutions, total net banking income would seem the most appropriate definition of ‘turnover’, i.e. total net income before impairment and operating expenses, but including net interest income, net fees and commissions income, net trading income, and other operating income.

Accounting directive (Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013), being amended in January 2023 by CSRD (Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022), introduced in article 2(1)(5) for credit institutions different definition of ‘net turnover’ in accordance with point (c) of Article 43(2) of Council Directive 86/635/EEC. The latter defines it

• in line with article 27 as the sum of (i) Interest receivable and similar income, showing separately that arising from fixed-income securities, (ii) Income from securities (Income from shares and other variable-yield securities, Income from participating interests, Income from shares in affiliated undertakings), (iii) Commissions receivable, (iv) Net profit or net loss on financial operations, (v) Other operating income, or
• in line with article 28 as the sum of (i) Interest receivable and similar income, showing separately that arising from fixed-income securities, (ii) Income from securities (Income from shares and other variable-yield securities, Income from participating interests, Income from shares in affiliated undertakings), (iii) Commissions receivable, (iv) Net profit on financial operations, (v) Other operating income.

Definition in accounting directive is similar to the definition proposed in QA 2014_1249, whereas it cannot be overlooked that the definition of ‘turnover’ refers to net items, whereas the definition of ‘net turnover’ includes interest income and commissions receivable on gross basis.

We see no background for two definitions (misleadingly named), therefore we propose to align them.

Additionally, we noticed that the calculations of ‘net turnover’ in article 27 of accounting directive and in article 28 do not give the same result. The definition in article 27 includes ‘Net profit or net loss on financial operations’, whereas the definition in article 28 includes ‘Net profit on financial operations’ (‘Net loss on financial operations’ is excluded). Besides that, aggregating net profit and net loss of financial operations in line with article 28 depends significantly on how granular is input for its calculation - net profit and net loss for the institution as a whole (meaning that the institution has either net profit or net loss from financial operations; net loss is very rarely expected, if at all), or should it be split by item in statement of profit or loss, or by individual instrument, or any variation in between. Guidance to align definition for credit institutions would be appreciated.