Loan Loss Provision Ratio (LLPR)
Ratio of loan loss reserves to total loans outstanding
FORMULA
LLPR = Loan Loss Provision / Total Loans Outstanding
Alternate Calculations
Reserve Adequacy
Allowance for Loan Losses / Non-Performing LoansWhat is Loan Loss Provision Ratio?
Loan Loss Provision Ratio measures the adequacy of reserves set aside by a bank to cover potential loan defaults. It reflects management's assessment of credit risk in the loan portfolio.
Higher ratios indicate more conservative lending or higher perceived risk. Regulatory requirements often mandate minimum ratios. Critical for financial stability.
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Sample Data
| quarter | provision | loans | npl | ratio |
|---|---|---|---|---|
| Q1 | 18,000 | 1,800,000 | 45,000 | 1 |
| Q2 | 19,500 | 1,900,000 | 48,000 | 1.03 |
| Q3 | 21,000 | 2,000,000 | 50,000 | 1.05 |
| Q4 | 22,500 | 2,100,000 | 52,000 | 1.07 |
Required Data Columns
provisiontotal_loansnplratio