Loan Loss Provision

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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 of USD 1.1 million for the six months ending June 30, 2019 decreased 47% from the six months ending June 30, 2018.

MainStreet Bancshares reports record Q2 earnings

"Interest income on customer loans and advances declined by two per cent to Sh9.9 billion due to lower average balances coupled with re-pricing in line with the reduction of the Central Bank Rate while interest income from government securities increased by 15 per cent."The fall in loan loss provision continues to provide the base for banks' increasing their profits in the nine month period, with fellow top tier lenders KCB, Cooperative Bank, DTB and Equity Bank all making significant reductions in their loan loss provisions even as the stock of bad loans goes up.

StanChart nine month net profit rises to Sh6.3bn

In addition, results for the second quarter of 2017 included a favorable adjustment to earnings from the reversal of a liability of $700 thousand for deferred compensation, as well as recaptures of $300 thousand in loan loss provisions.

Broadway Financial Corporation announces net loss of $127 thousand

Dubai: The Gulf Cooperation Council banks achieved a 6 per cent profit growth in 2017 despite a 2 per cent decline in revenue growth, signalling gains in cost management and lower loan loss provisions, according to BCG's GCC Banking Performance Index, an annual study on the region's banking sector performance.

GCC banks maintain profit growth despite slowing revenues

2,416 crore in the third quarter of the current fiscal, attributed to lower trading income on account of hardening of bond yields, higher corporate slippages leading to higher loan loss provisions and significant investment depreciation hit.

SBI reports Rs 2,416 cr loss in Q3

Loan loss provisions were $1.8 billion for the three months ending Sept.

Loan Loss Provisions Climb in Third Quarter for CUs

Although a sharp jump in loan loss provisions was a drag on UBI's fourth quarter bottom-line, it is the only bank among public sector units that had posted a profit in the quarter.

India News - REFORMS TO CUT BAD LOANS IN BANKS

Other Operating Income was higher by circa Dh16 million, primarily on account of robust recoveries in the commercial lending portfolio against which loan loss provisions were held.

FH earning up in first quarter

Iain Coke, Head of ICAEW's Financial Services Faculty, said: "We expect the new model will increase the loan loss provisions on banks' balance sheets by about 50 per cent on average, although this will vary substantially between institutions.

IASB moves from incurred to expected loss model

Loan loss provisions are expenses set by banks to cover estimated losses on loans due to defaults and nonpayment.