Banking Terms & Concepts (Vocabulary)

Question 1

Credit Risk Assessment

Answer 1

Definition: A process of evaluating the potential risks involved in lending to a borrower.

Example Sentence: “The bank conducted a thorough credit risk assessment before approving the loan application.”

Context: Common in lending and loan approval processes.

Question 2

Loan-to-Value Ratio (LTV)

Answer 2

Definition: A financial term used by lenders to express the ratio of a loan to the value of an asset purchased.

Example Sentence: “The bank offers a higher interest rate for loans with a higher loan-to-value ratio (LTV).”

Context: Used in mortgage and SME loan applications.

Question 3

Business ownership

Answer 3

Business ownership refers to holding a business entity’s legal rights and responsibilities. This includes control over business operations, decision-making, and entitlement to profits and losses.

Question 4

Business premise ownership

Answer 4

Business premise ownership refers to holding the legal rights to a physical location or property where the business operates. This includes land, buildings, and other real estate used for business activities.

Question 5

Sales turnover

Answer 5

The income before subtracting costs like salaries, rent, materials,…

Question 6

Bank statement-derived turnover

Answer 6

The estimated total business revenue is calculated based on the inflows recorded in the company’s bank statements, rather than from official financial reports like audited accounts.