Loan Loss Provision Coverage Ratio Calculator

✖Pre-Tax Income is the remaining taxable income after adjusting earnings before interest and taxes (EBIT) for non-operating items.ⓘ Pre-Tax Income [EBT]			+10% -10%
✖Loan Loss Provision is an accounting technique used by financial institutions to anticipate and prepare for potential losses from loans that may not be repaid in full.ⓘ Loan Loss Provision [LLP]			+10% -10%
✖Net Charge Offs are metric used by financial institutions to assess the quality of their loan portfolios and the effectiveness of their risk management practices.ⓘ Net Charge Offs [NCO]			+10% -10%

✖Loan Loss Provision Coverage Ratio is a financial metric used by banks and financial institutions to assess their ability to cover potential losses from loan defaults.ⓘ Loan Loss Provision Coverage Ratio [LLPCR]

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Formula

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Loan Loss Provision Coverage Ratio

Formula

`"LLPCR" = ("EBT"+"LLP")/"NCO"`

Example

`"40.5"=("1500"+"120000")/"3000"`

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Loan Loss Provision Coverage Ratio Solution

STEP 0: Pre-Calculation Summary

Formula Used

Loan Loss Provision Coverage Ratio = (Pre-Tax Income+Loan Loss Provision)/Net Charge Offs
LLPCR = (EBT+LLP)/NCO
This formula uses 4 Variables

Variables Used

Loan Loss Provision Coverage Ratio - Loan Loss Provision Coverage Ratio is a financial metric used by banks and financial institutions to assess their ability to cover potential losses from loan defaults.
Pre-Tax Income - Pre-Tax Income is the remaining taxable income after adjusting earnings before interest and taxes (EBIT) for non-operating items.
Loan Loss Provision - Loan Loss Provision is an accounting technique used by financial institutions to anticipate and prepare for potential losses from loans that may not be repaid in full.
Net Charge Offs - Net Charge Offs are metric used by financial institutions to assess the quality of their loan portfolios and the effectiveness of their risk management practices.

STEP 1: Convert Input(s) to Base Unit

Pre-Tax Income: 1500 --> No Conversion Required
Loan Loss Provision: 120000 --> No Conversion Required
Net Charge Offs: 3000 --> No Conversion Required

STEP 2: Evaluate Formula

Substituting Input Values in Formula

LLPCR = (EBT+LLP)/NCO --> (1500+120000)/3000

Evaluating ... ...

LLPCR = 40.5

STEP 3: Convert Result to Output's Unit

40.5 --> No Conversion Required

FINAL ANSWER

40.5 <-- Loan Loss Provision Coverage Ratio

(Calculation completed in 00.004 seconds)

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< 11 Financial Institutions Management Calculators

Loan Loss Provision Coverage Ratio

Go Loan Loss Provision Coverage Ratio = (Pre-Tax Income+Loan Loss Provision)/Net Charge Offs

Loan Default Rate

Go Loan Default Rate = modulus(Number of Loans Defaulted)/(Total Number of Loans Issued)

Capital Adequacy Ratio

Go Capital Adequacy Ratio = (Tier One Capital+Tier Two Capital)/Risk Weighted Asset

Operational Efficiency Ratio

Go Operational Efficiency Ratio = (Operating Expense+Cost of Goods Sold)/Net Sales

Return on Operating Assets

Go Return on Operating Assets = modulus(Net Income)/Operating Assets

Net Interest Margin

Go Net Interest Margin = Net Interest Income/Average Interest Earning Assets

Cash Reserve Ratio

Go Cash Reserve Ratio = (Cash Reserves/Net Demand & Time Liabilities)*100

Tier 1 Capital Ratio

Go Tier One Capital Ratio = Tier One Capital/Risk Weighted Asset

Credit Deposit Ratio

Go Credit Deposit Ratio = (Total Advances/Total Deposits)*100

Debt Yield

Go Debt Yield = Net Operating Income/Loan Amount

Net Worth

Go Net Worth = Total Assets-Total Liabilities

Loan Loss Provision Coverage Ratio Formula

Loan Loss Provision Coverage Ratio = (Pre-Tax Income+Loan Loss Provision)/Net Charge Offs
LLPCR = (EBT+LLP)/NCO

What is Loan Loss Provision Coverage Ratio?

It measures the adequacy of the reserves set aside by the institution to absorb potential losses from non-performing loans (NPLs) or loan defaults.A higher Loan Loss Provision Coverage Ratio indicates a greater ability of the bank to cover potential losses from non-performing loans with its loan loss reserves. It suggests that the bank has set aside sufficient funds to absorb potential losses, which can enhance its financial stability and resilience to economic downturns.

Conversely, a lower ratio may indicate that the bank has inadequate reserves to cover potential loan losses, which could expose it to higher levels of risk. In such cases, the bank may need to increase its loan loss provisions or take other measures to manage its credit risk effectively.
Monitoring the Loan Loss Provision Coverage Ratio is essential for banks to assess their risk management practices, ensure regulatory compliance, and maintain financial stability.

How to Calculate Loan Loss Provision Coverage Ratio?

Loan Loss Provision Coverage Ratio calculator uses Loan Loss Provision Coverage Ratio = (Pre-Tax Income+Loan Loss Provision)/Net Charge Offs to calculate the Loan Loss Provision Coverage Ratio, The Loan Loss Provision Coverage Ratio formula is defined as a financial metric used by banks and financial institutions to assess their ability to cover potential losses from loan defaults. Loan Loss Provision Coverage Ratio is denoted by LLPCR symbol.

How to calculate Loan Loss Provision Coverage Ratio using this online calculator? To use this online calculator for Loan Loss Provision Coverage Ratio, enter Pre-Tax Income (EBT), Loan Loss Provision (LLP) & Net Charge Offs (NCO) and hit the calculate button. Here is how the Loan Loss Provision Coverage Ratio calculation can be explained with given input values -> 40.5 = (1500+120000)/3000.

FAQ

What is Loan Loss Provision Coverage Ratio?

The Loan Loss Provision Coverage Ratio formula is defined as a financial metric used by banks and financial institutions to assess their ability to cover potential losses from loan defaults and is represented as LLPCR = (EBT+LLP)/NCO or Loan Loss Provision Coverage Ratio = (Pre-Tax Income+Loan Loss Provision)/Net Charge Offs. Pre-Tax Income is the remaining taxable income after adjusting earnings before interest and taxes (EBIT) for non-operating items, Loan Loss Provision is an accounting technique used by financial institutions to anticipate and prepare for potential losses from loans that may not be repaid in full & Net Charge Offs are metric used by financial institutions to assess the quality of their loan portfolios and the effectiveness of their risk management practices.

How to calculate Loan Loss Provision Coverage Ratio?

The Loan Loss Provision Coverage Ratio formula is defined as a financial metric used by banks and financial institutions to assess their ability to cover potential losses from loan defaults is calculated using Loan Loss Provision Coverage Ratio = (Pre-Tax Income+Loan Loss Provision)/Net Charge Offs. To calculate Loan Loss Provision Coverage Ratio, you need Pre-Tax Income (EBT), Loan Loss Provision (LLP) & Net Charge Offs (NCO). With our tool, you need to enter the respective value for Pre-Tax Income, Loan Loss Provision & Net Charge Offs and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.

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