The full functioning of an average company is possible if it has additional and permanent sources of financing. The enterprise can use both its own resources and attract financial resources from credit institutions. For example, a head of a firm or an entrepreneur may apply to a bank for a consumer loan or a commercial loan.

Dimensions interest rate determined by each client individually. At the same time, the choice of the optimal option can be difficult due to the difference in indicators in different banks. For this reason, the weighted average interest rate on loans is used. The term definition method and formulas for its calculation are standardized and applied in all banks.

Definition of the term

Weighted average interest rates on granted loans are formed depending on the level of their use. The indicator of a financial enterprise is defined as the total value of previously issued and received loans. Simply put, this term means the average price of the loan portfolio. The indicator is considered within the company in order to analyze the effectiveness of its activities.

Within the framework of the general banking system, the term refers to the total cost of all loans in all banks of the country. The success and efficiency of the banking system is determined on the basis of an indicator of this level. The weighted average interest rate can also be used as a criterion for assessing the dynamics of credit policy progress.

Types of loans to determine the indicator

The weighted average interest rate of the Central Bank of the Russian Federation on loans is calculated on a mandatory basis, which is due to the need to analyze the company's activities. The required calculations cannot be performed using simple indicators characterizing the lending procedure. For this reason, experts take into account the various categories of loans issued by banks when making calculations.

In particular, the following types of loans apply:

• With a long grace period.
• Investment.
• provided for a short period of time.
• Funds issued by the bank in the form of current assets.

It should be noted that the weighted average interest rate of the Central Bank of the Russian Federation is calculated for individuals and companies. Both indicators are publicly available: for example, last year the indicator was 15% per annum.

What is included in bank assets?

To assess the liquidity of a credit institution, it is necessary to know what is included in their assets. Under the assets of the bank means the resources owned by the organization. The Company may dispose of them at its own discretion.

Bank assets include:

• Own resources.
• Cash balances on current accounts owned by legal entities and individuals.
• Deposit accounts owned by organizations.
• private deposits.
• Interbank and similar loan products.

An excessively liquid bank that falls out of balance begins to lose its profit, since free funds can be put into circulation and begin to receive a percentage of profit from them, but during the time period that the money was in the account, they lay as a useless load, and not worked.

Why calculate the average cost of loans

Commercial financial institutions in Russia regulate their own liquidity by attracting third-party resources or placing the excess of their funds outside the bank. The resources of commercial banks are:

• Start-up capital.
• Deposit agreements of enterprises.
• Cash balances on settlement or current bank accounts belonging to legal entities and/or individuals.
• Bank deposits population.
• Other loans, including interbank ones.

Excessively liquid commercial financial institution may issue interbank loans to other structures with less liquidity. On the contrary, when there is a lack of liquidity, commercial banks resort to interbank lending in order to attract resources.

The weighted average interest rates of interbank loans directly depend on the balance of demand and supply of finance in the market. At the same time, interbank lending operations affect the cost of loans for individuals and the efficiency of financial institutions.

For this reason, the volume of credit transactions in the credit market is regularly monitored and regulated by the Central Bank. Russian Federation. He carefully adjusts interest rates on loans.

A timely and adequate reaction of the Central Bank of Russia to changes in liquidity in the banking system of the state and the cost of national resources is possible only with the regular and correct calculation of indicators of the weighted average interest rate affecting interbank credit institutions.

Formulas for calculations

The parameter of the weighted average interest rate for loans to individuals and companies is calculated using a special formula. The definition of the standard average differs from the interest rate calculation scheme: the loan amount plays a significant role in it. The formula for the calculation is as follows:

ATP \u003d ∑ (K * P) / ∑ K, where:

• ATP is the weighted average interest rate.
• K - the balance of the credit account.
• P - credit rate.

Calculation example

A practical example will help you understand the correct order of calculations. You can take three loans with different parameters:

• The first loan in the amount of 15 million rubles at 10%.
• The second - in the amount of 10 million rubles at 8% on the condition that 8 million have already been returned.
• The third - in the amount of 2 million rubles at 15% with a loan balance of 1.5 million.

The calculations made using the above formula allow us to say that the value of the weighted average interest rate is about 10%. Interest rates for foreign currency loans are determined in a similar way, however, when calculating them, the main exchange rate is taken into account Central Bank RF.

Decrease in the average interest on loans

The most efficient use of attracted financial resources is possible at the minimum weighted average interest rate. To keep it at a low level, you must follow a few rules:

1. Making loans at the lowest interest rate.
2. Prioritize loans with high interest rates.
3. To refinance or restructure the loan subject to an increase in the interest rate during the loan term.
4. The debt repayment schedule is drawn up in such a way that only loans with low interest rates remain open at the end of the term.

Within a single enterprise, the weighted average interest rates on loans should be strictly controlled. This strategy allows you to appropriately distribute the company's resources and maintain the efficiency of its activities.

A similar rule applies to the amount of credit resources in the country, since the efficiency financial system state directly depends on the weighted average rate. The Central Bank is responsible for tracking and adjusting the rate.

Results

The procedure for calculating the weighted average is quite simple. To do this, it is desirable to know the basic criteria for loan products and be able to use a special formula.

For the normal functioning of the company, it always needs sources of financing. In addition to own assets, borrowed funds, such as loans from third parties, can also be used. However, each of the borrowers has the right to set their own interest rates on loans, which complicates the assessment of the cost of the organization's loans. It is in such cases that such an indicator as the weighted average interest rate on loans is used.

concept

The concept of the weighted average rate can be interpreted in different ways, based on the level at which it is applied. For example, if we are talking about a specific financial institution, then the weighted average rate on loans is the average cost of all loans (both issued and received). In other words, the average value of an individual bank's loan portfolio. This indicator is considered within the organization to analyze the effectiveness of its financial activities.

If we consider the weighted average interest rate at the level of the entire banking system, then this term means the cost of loans taken and issued by all banks of the Russian Federation. It is used by the Central Bank to study the effectiveness and success of the country's banking system as a whole. In addition, the weighted average interest rate on loans of the Central Bank of the Russian Federation can be used as a criterion for assessing the dynamics of the promotion of a single credit policy of our state.

Types of loans

The calculation of the average interest rate arose due to the need to carry out a general the financial analysis organization's activities. But using the simplest arithmetic) it is impossible to make such calculations, since credit organizations work with different types loans that are issued at different interest rates.

Loans are:

• long-term;
• short-term;
• investment;
• negotiable.

Also, the weighted average interest rate can be calculated by the Central Bank separately for individuals and legal entities. These indicators are available for public use. For example, the weighted average interest rate on loans for individuals for a period of more than 365 days in December 2016 was 15.48%.

Why calculate the average cost of loans?

For stable performance banking organizations they need to control their own liquidity. Liquidity is the real ability of assets to become easily transferable in cash. This means that an asset is considered liquid if it can be sold at the market price in the shortest possible time.

When, when analyzing current activities, a financial institution finds that it is excessively liquid (has a lot of liquid assets), it needs to issue as many interbank loans as possible. Conversely, when liquidity is low, banks are forced to raise assets on the side.

Interest rates on loans for individuals and organizations are directly dependent on the golden rule of supply and demand. Therefore, the Central Bank of the Russian Federation constantly monitors the volume of lending operations by calculating the weighted average interest rate on loans. This makes it possible to quickly respond to changes in the financial market and, if necessary, reduce or increase the level of interest rates on interbank lending operations.

What is included in bank assets?

To assess the liquidity of a bank, you need to know what is included in its assets. The assets of the bank are the resources of the organization that belong to it. Moreover, she has the right to dispose of them at her discretion. Bank assets include:

• equity;
• balances on settlement accounts of individuals and legal entities;
• funds on deposit accounts of organizations;
• bank deposits of individuals;
• interbank and other loans.

When a bank falls out of balance and becomes excessively liquid, it simply loses its profits. Since free funds can be invested and receive a certain percentage of profit from them. However, during the time when the money just lay on the accounts, they did not work, but lay as a useless load.

Formula for calculating the weighted average interest rate on a loan

To correctly calculate average cost loan portfolio, organizations use a special formula that differs significantly from a simple arithmetic mean. Since the cost of a loan depends not only on its interest rate, but also on its amount.

This formula looks like this:

ATP \u003d ∑ (K * P) / ∑ K, where:

• SPS - weighted average interest rate;
• K - loan balance;
• P is the interest rate.

Calculation example

To understand how to use this formula, you need to put it into practice. Suppose an organization has three loans:

• in the amount of 15 million rubles at 10% per annum;
• in the amount of 10 million rubles at 8% per annum, while the organization has already paid 8 million rubles to the creditor;
• in the amount of 2 million rubles at 15% per annum, with a residual loan amount of 1.5 million rubles.

Knowing the formula, you can find out that the weighted average interest rate on loans provided by the company is equal to:

ATP \u003d (15 * 0.1 + 8 * 0.08 + 1.5 * 0.15) / (15 + 8 + 1.5) * 100% \u003d 0.097 * 100% \u003d 9.7%

In this case, the weighted average rate may change if:

• the company will receive another loan;
• the interest rate on any of the current loans will change;
• the company will make full or partial repayment of credit obligations.

The weighted average interest rates on loans in rubles are found similarly to foreign currency loans. But since the analysis of financial activity is carried out only in national currency, it is necessary to take into account the exchange rate of the Central Bank at the time of assessing the loan portfolio.

How to reduce the average interest on loans?

In order to use borrowed funds as efficiently as possible, it is necessary to keep the weighted average interest rate at the lowest possible level. To do this, you need to follow some rules:

1. Take loans only at the lowest interest rate.
2. Pay back loans with the highest interest rates first.
3. If during the term of the loan the interest rate has increased, it is necessary to restructure or refinance the loan.
4. Draw up a debt repayment schedule, taking into account the fact that only low-interest loans should remain open at the end of the term.

The weighted average interest rates on loans provided by credit institutions within the framework of one enterprise must be kept under constant control. This will allow you to effectively manage the resources of the company and maintain maximum efficiency of its work.

The same rule applies to the cost of all credit resources in the country. After all, the efficiency of the entire financial system of the state depends on the weighted average interest rate. However, we will leave this responsibility to the Central Bank, which copes with it perfectly.

Suppose an organization has three loans:

• in the amount of 15 million rubles at 10% per annum;
• in the amount of 10 million rubles at 8% per annum, while the organization has already paid 8 million rubles to the creditor;
• in the amount of 2 million rubles at 15% per annum, with a residual loan amount of 1.5 million rubles.

Knowing the formula, you can find out that the weighted average interest rate on loans provided by the company is equal to: 100% \u003d 0.097 * 100% \u003d 9.7% At the same time, the weighted average rate may change if:

• the company will receive another loan;
• the interest rate on any of the current loans will change;
• the company will make full or partial repayment of credit obligations.

The weighted average interest rates on loans in rubles are found similarly to foreign currency loans.

Weighted average interest rate

Formula for calculating the weighted average interest rate on a loan In order to correctly calculate the average cost of a loan portfolio, organizations use a special formula that differs significantly from a simple arithmetic mean. Since the cost of a loan depends not only on its interest rate, but also on its amount. This formula looks like this: ATP \u003d ∑ (K * P) / ∑ K, where:

• ATP - weighted average interest rate;
• K - loan balance;
• P is the interest rate.

Calculation example To understand how to use this formula, you need to put it into practice.

What is the weighted average interest rate on loans?

Important

In layman's terms, the bank exchanges its bag of money that it has today for cash flows in future. Businesses, for their part, know how to organize these future cash flows from their operations, but to do so, they need cash today. The bank lends money for a period of time in the hope of generating income, the business takes the money and gives back a legally binding document (agreement) with a promise to return all the money plus some additional amount for using the money for a certain period of time.

As a matter of fact, financial instrument is a transaction for the exchange of a bag of money available for cash flows in the future. One party gives money and receives paper (agreement), the other party gives paper (agreement) and receives money. A more understandable example for any person is a deposit in a bank.

What is the weighted average loan rate?

Total: 12 000.00 rub. RUB 12,682.50 As can be seen from the calculations, in the first option (without capitalization) you receive exactly 1,000.00 rubles every month, which you can dispose of at your own discretion (it is not expected that you put them on a new deposit - you will not reinvest). For the year, an amount equal to 12,000.00 rubles is obtained. The annual interest rate is easily calculated as 12,000.00 rubles. / RUB 100,000.00 = 12% per annum. Such a calculation is similar for the nominal lending rate: when receiving money from you, the Bank does not reinvest them.

Attention

In the second case (with capitalization), the total amount of interest for the year was 12,682.50 rubles. (more than in the first version). Interest accrued every month is not available to you until the end of the deposit term. They are reinvested, added to the principal amount of the deposit.

To receive the same amount without capitalization (i.e.

Calculation of the effective interest rate on a loan in excel

Calculation of the weighted average credit rate Let's say a company took out three loans with interest rates of 14, 12 and 16 percent, if we calculate the usual average value of all rates on loans, we get (14% + 16% + 12%) / 3 = 14%. According to this calculation, the average value of all interest rates on loans will be 14%, but this figure is not a characteristic of the company's loan portfolio. It must be remembered that the cost of using a loan directly depends on its amount, therefore, a company whose loan portfolio contains loans for a larger amount with a lower interest rate will have a significantly lower price of loans.
According to this principle, when determining total cost loans, not the average interest rate is used, but the weighted average. The calculation of the weighted average rate is carried out on the balance of the debt separately for each loan.

Calculation of the effective rate in ms excel

The reason is that here, as well as for deposits, there are “compound” interest and annuity payments: one part goes to pay off the body of the debt, and the other part goes to interest on it. That is, for each month, interest is charged not only on the amount that you borrowed from the bank, but also on the amount of interest you have not yet paid. Calculating the effective interest rate the right way to present your loan repayment costs as accurately as possible is to determine the effective interest rate yourself, using a ready-made formula.
First of all, you need to clarify with what interval the interest on your loan is calculated - every month, quarter, year, continuously, etc. And, of course, you need to know the nominal rate on the loan.

Effective tax rate

At the same time, its weight directly depends on the loan amount at a stable interest rate when calculating the weighted average interest rate. The following formula is used for the calculation:

• iav.vz. — weighted average rate;
• Sost - loan debt or loan balance;
• itek is the interest rate of the loan.

Usually, to calculate the weighted average rate, calculations are performed in Excel using the SUMPRODUCT function. If we calculate the rate using the formula for the above example, then the average rate will not be 14%, but 14.38%.
This is due to the fact that most of the amount of loans had a rate higher than the average.

IFRS, dipifr

The nominal rate here is understood as the annual rate, which is prescribed, for example, in an agreement for opening a deposit. Let's assume that compound interest is accrued m times a year. The effective annual interest rate makes it possible to see what annual simple interest rate will achieve the same financial result as m-time accumulation per year at the rate i / m, where i is the nominal rate. With a contract term of 1 year, according to the accrued amount formula, we have :S = Р*(1+i/m)^m – for compound interest, where Р – initial deposit amount. S = Р*(1+ieff) – for simple interest Since financial results S must be, by definition, the same for both cases, we equate both equations and after transformation we get the formula given in the MS EXCEL help for the EFFECT()ieff function =((1+i/m)^m)-1 Note.
The IRR() function is similar to IRR() (used to calculate the internal rate of return, IRR), which uses a similar discounting of regular payments, but based on the number of the payment period, rather than the number of days. Using the effective rate to compare loan agreements with different repayment schemes Let's imagine a situation where in 2 different banks we are offered to borrow the same amount on the same terms, but the loan will be repaid in one by differentiated payments, and in the other by an annuity scheme ( equal payments). For simplicity, let's assume that there are no additional charges.
Does the value of the effective rate depend on the repayment schedule? We immediately give the answer: it depends, but only slightly.
Refer to the Excel program:

• The EFFECT() function will help you calculate the first formula.
• SERIESUM is useful for calculations using the second formula.

Thus, it can be noted that, even knowing the nominal rate, the size of all commissions and the cost of insurance products, we alone (as well as a loan officer) will be able to calculate only an approximate value of EIR. Independent calculations are complicated by "compound" interest, annuity payments, and penalties in case of late payment, which cannot be predicted in advance.

• 14.09.2017

In the conditions of constant fluctuations in the market and stock exchanges, many residents of our country prefer to trust the preservation and increase of their own capital to banks. To do this, they use a system of deposits. Some organizations go in a similar way, especially when they have unclaimed monetary units in a specific time period.

What caused such interest in bank deposits? First of all, the opportunity to save and slightly increase the amount of the deposit. But the relatively low risks shown by the calculation in the banking system are also of great importance. It is also important to have a choice of deposit programs:

• Long-term investments up to demand;
• Urgent investments.

However, it is important not only to choose the right type of deposit, but also to correctly determine the bank with which to cooperate. And here the choice largely depends on what interest rate is offered by the bank and how it relates to the weighted average rate.

What is the weighted average interest rate?

The average market interest rate on deposits is the average rate for all deposits in a particular currency among banks in the country. At the same time, deposits with different investment periods and different conditions are taken into account.

The weighted average rate is also an excellent way to determine the liquidity and reliability of a deposit. Thus, above average interest causes joy and an instant desire to invest only among inexperienced investors. The rest of the investors understand that in most cases a catch is hidden behind a tasty offer.

For example, a common practice among structures on the verge of bankruptcy is to attract the maximum amount of capital in an attempt to solve their problems. Such banks are willing to take risks and pay for their miraculous relief from problems with higher dividend rates. But what are the chances that the bank will pull itself out of the abyss, and not go to the bottom, dragging your money along with it? After all, today the amount of compensation is only seven hundred thousand rubles.

However, the situation is not always so deplorable. Sometimes high deposit rates are also associated with favorable moments:

• holidays;
• Anniversary of the bank;
• They are offered by young, but already quite reliable structures.

How to correctly calculate the average market rate of deposits?

The calculation of the average market interest rate on deposits assumes that it is necessary to take into account all offers on the market, sum them up and divide the result by the number of source banks. That is, we get the following formula:

F=((N_1+ N_2+⋯+N_n))/n

• F – weighted average interest rate;
• N - Bank rate;
• n - Number of banks.

The resulting calculation can be used to analyze the liquidity and feasibility of your investments.

IN modern economy it is possible to carry out calculations not only of the average market interest rate for the country, but also to make calculations within a particular bank, investment portfolio. This should take into account:

• Interest capitalization term;
• Type of deposit;
• interest rate.

Parameters	Parameters	Description
Type of investment	Up to requirement	Such deposits include deposits that do not have a clearly defined investment deadline. The money is simply returned to the depositor at his request. At the same time, the interest on such accounts is lower than on time deposits.
	Term Investments	Investment for a strictly defined period. It has a fairly high interest rate, which makes it attractive. But there is also a drawback: when trying to withdraw funds from circulation early, penalties are applied to the investor, up to the complete zeroing of all dividends.
Capitalization period	1 month
	1 quarter	Usually, accruals with such a period indicate their frequency, which means that we are talking about compound interest. They are characterized by the fact that they are accrued at a certain interval throughout the entire investment period. For example: a deposit is opened for 1 year with compound interest and a capitalization period of 1 quarter. This means that dividends will be accrued 4 times a year.
	At the end of the period	Investments of this type are distinguished by the fact that dividends on them are accrued at the end of the deposit. That is, if the account is opened for a period of 3 years, then dividends will be accrued once, three years from the date of opening the account. Cases where this type of dividend accrual is applied are called deposits with simple interest.
Interest rate		The specific interest rate determines how much dividends will be accrued. However, it must be carefully analyzed, compared with the average interest rate. If we talk about the end of 2014, then for deposits in domestic currency, the average market rates were: · About 9% for short-term investments; · 9.7% for long-term investments; · Three and thirty-three per cent period for dividends, with the investment period up to the settlement requirement. Up-to-date information can always be found in the publications of the Central Bank.

Portfolio Weighted Average Rate Calculation Methods

For portfolio investments, such a concept as the average market interest rate is also applicable. It is calculated for all deposits, and the method of calculating depends on which deposits are in the portfolio: we are talking about simple interest or compound interest. Although, of course, have their influence and other indicators:

• Deposit amount;
• Investment period;
• Capitalization period for compound interest;
• deposit rate.

When it comes to a deposit that is capitalized at the end of the term, where simple interest works, then the amount of dividends is calculated according to the following algorithm:

1. The investment amount must be multiplied by the annual interest rate;
2. Multiply the result of the 1st point by the investment period in days;
3. Divide the product by 365 and divide the resulting quotient by 100.

Working with compound interest is more difficult:

1. Calculate the total amount of the deposit, taking into account the capitalized amount according to the easy interest scheme. The received capital is taken as the volume of investments;
2. Multiply the amount of investment by the annual interest rate;
3. Multiply the product by the term of the capitalization period in days;
4. Divide the result by 365 and by 100;
5. Take the resulting quotient as the amount of the final dividend for 1 year.

Thus, the calculation of the weighted average interest rate on the deposit allows not only to analyze and correctly assess the situation on the market and within the banking system. It also serves to evaluate specific deposits and calculate the monetization of dividends.

For the average company to be able to fully function, it needs additional and permanent sources of funding. In addition to its own funds, the company can use attracted resources from credit organizations. For example, an entrepreneur or head of a company may well go to a bank and issue commercial loan or take out a personal loan.

Each client can independently determine the size of the interest rate in order to choose the optimal one in the future. At the same time, the difference in indicators in different banks seriously complicates the choice of the appropriate option. In this regard, such an indicator as the weighted average interest rate on loans is used. Our article will be devoted to how this term is defined, as well as what formulas are used to calculate this indicator. We will say a few words about the application of the final indicator.

The weighted average rate on a loan may have a different definition depending on the level at which it is used. For example, when it comes to a financial enterprise, this indicator will be defined as the value of all loans previously issued and received. In other words, we are talking about the average cost of the loan portfolio. This indicator is considered within the company to perform an analysis of the effectiveness of the company.

If we talk about this indicator as an integral part of the overall banking system, then the term will mean the cost of all loans in all banks of the Russian Federation. An indicator of this level is used by the Central Bank of the Russian Federation to determine the efficiency and success of the banking system. In addition, the average rate can be used as a criterion for assessing the dynamics of credit policy promotion in the country.

What types of loans are included in the indicator?

The calculation of the average indicator is mandatory, and this approach is due to the need to analyze the overall performance of the company. With the help of simple indicators characterizing the lending procedure, it will be impossible to perform calculations. In this regard, specialists conducting calculations are guided by various groups of loans issued by banks.

In particular, we are talking about the following types of loans:

• provided for a long period of time;
• issued in the short term;
• investment;
• funds issued by banks as current assets.

Additionally, it is worth noting that the average interest rate can be calculated by the Central Bank of the Russian Federation separately for individuals. individuals and separately for companies. Both indicators are available for general use. For example, last year this figure was about 15% per annum.

What is the purpose of calculating the average cost of loans?

For banking institutions to work as stably as possible, it is necessary that they be able to control their own liquidity. In this case, we are talking about the real possibility of assets being sold at any convenient moment. In essence, this means that the property can be sold in the shortest possible time at the market price.

When analyzing current liquidity, a company may find that it has excess liquidity, that is, when there are a lot of such assets. To effectively use these funds, you can issue them as interbank loans. The situation is reversed when banks have assets with low liquidity and are forced to attract assets on the side.

When determining interest rates, the classical Keynesian rule is used, namely, the relationship between supply and demand. This moment determines the need to calculate the average rate on loans. For example, the indicator allows you to respond in a timely manner to changes in the provisions financial market, as well as to establish the need to increase or decrease interest rates on the loan.

What formula is used for calculations?

To correctly determine the indicator, you must use a special formula. The calculation scheme differs significantly from the definition of a simple average value. Here, not only the interest rate, but also the amount of the loan plays a significant role. The formula looks like this:

ATP \u003d ∑ (K * P) / ∑ K, where:

• ATP - weighted average percentage;
• K - credit balance;
• P - loan rate

To understand the calculation procedure, it is worth using a practical example. Suppose there are three loans, and each has its own parameters:

• 1 - 15 million rubles. under 10%;
• 2 - 10 million rubles at 8%, but 8 million have already been returned;
• 3 - 2 million rubles at 15% with a loan balance of 1.5 million.

The calculation will look like this:

ATP \u003d (15 * 0.1 + 8 * 0.08 + 1.5 * 0.15) / (15 + 8 + 1.5) * 100% \u003d 0.097 * 100% \u003d 9.7%, that is, the average is about 10%. Interest rates on loans in foreign currency will be determined in a similar way, however, when assessing, it is necessary to take into account the exchange rate of the Central Bank of the Russian Federation.

Conclusion

Summing up, it is worth noting that the procedure for calculating the weighted average is quite simple. To do this, you need to know the basic criteria for loan products and be able to use a special formula.