Commercial Banking
Interpret asset quality and provisions
What you will learn
Read impaired balances and loss allowances on consistent bases.
Illustrative coverage = allowance on impaired loans ÷ gross impaired loans
Separate the gross stock of impaired loans, the allowance held against losses, and the provision expense recognised in the period. Trace new stress, recoveries, write-offs and changes in estimates. Compare like definitions and denominators. Indian regulatory classification and accounting treatment depend on the applicable institution and period. A fictional lender holds ₹60 crore allowance against ₹100 crore gross impaired loans. Simple coverage is 60%.
A fictional lender holds ₹60 crore allowance against ₹100 crore gross impaired loans. Simple coverage is 60%.
Separate the gross stock of impaired loans, the allowance held against losses, and the provision expense recognised in the period. Trace new stress, recoveries, write-offs and changes in estimates. Compare like definitions and denominators. Indian regulatory classification and accounting treatment depend on the applicable institution and period. A fictional lender holds ₹60 crore allowance against ₹100 crore gross impaired loans. Simple coverage is 60%.
Which measure is a period flow?