Work out expected credit loss instantly with clear inputs, formula shown and shareable results.
Expected credit loss is the product of three parameters: how likely default is, how much is outstanding when it happens, and how much is lost after recovery. The resulting loss rate is the minimum credit spread a lender must charge.
Expected credit loss
ECL = EAD × PD × LGD
Figures are estimates based on the inputs given. Bank charges, regulatory minima and market rates change and differ between institutions and jurisdictions. This is not financial advice — confirm with your bank or treasury policy.
No. Expected loss is covered by provisions and pricing; capital covers unexpected loss beyond the average.
Because a well-secured loan can lose almost nothing on default, while an unsecured one loses most of the exposure.