Loan Loss Provision

(redirected from Loan Loss Provisions)

Loan Loss Provision

A non-cash expense for banks to account for future losses on loan defaults. Banks assume that a certain percentage of loans will default or become slow-paying. Banks enter a percentage as an expense when calculating their pre-tax incomes. This guarantees a bank's solvency and capitalization if and when the defaults occur. The loan loss provision allocated each year increases with the riskiness of the loans a given bank makes. A bank making a small number of risky loans will have a low loan loss provision compared to a bank taking higher risks.
References in periodicals archive ?
Loan loss provisions were $60,000 and $75,000 for the quarters-ended December 31, 2007 and 2006, respectively.
Despite the high loan loss provisions, which were primarily attributable to a $2.
In the Core Bank, which encompasses the strategically important customer-centric business, revenues before loan loss provisions were improved in the second quarter compared to the prior year.
Last week, the Shura Council (the upper house of Egypt's parliament) raised taxes on bank's loan loss provisions.
Ulyukayev said, 'The banks have been rapidly increasing their loan loss provisions, thus incurring losses, but beginning in 2010 and definitely in 2011, lending institutions will be able to use those funds and become more attractive for investors.
Revenues before loan loss provisions in Core Bank stable in second quarter at EUR 2.
A tight cost control and stable loan loss provisions completed a sound performance that saw net income grow 36% YOY at September 2006.
The first six months decline over the previous year is due particularly to the weaker interest rate environment and higher loan loss provisions.
Lower loan loss provisions and greater revenue from the Royal Trust acquisition should strengthen profits.
Despite significantly higher interest expense, earnings rose compared to the same period a year ago due to lower loan loss provisions and a decrease in non-interest expense.
According to FDIC, troubled real estate loans have forced US banks to boost loan loss provisions to a record USD37.
The country's benign credit environment with loan loss provisions at a historically low level, healthy capital and savings ratios and low household debt has facilitated robust loan growth in the past few years.