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Loan Loss Provision Calculator

Work out loan loss provision instantly with clear inputs, formula shown and shareable results.

About Loan Loss Provision Calculator

Provisioning rises with the age and severity of impairment: a small general provision on performing loans, then escalating rates through sub-standard and doubtful to a full write-down on loss assets. The blended coverage shows the overall cushion.

Formula

Provisioning

Provision = 0.4% standard + 15% sub-standard + 40% doubtful + 100% loss

Worked example

With the default values below, Loan Loss Provision Calculator returns Total Provision Required of $24,000,000.00. Change any input above and every figure here is recalculated in your browser.

Inputs used

Standard Assetsminimum 0
800,000,000
Sub-Standard Assetsminimum 0
40,000,000
Doubtful Assetsminimum 0
22,000,000
Loss Assetsminimum 0
6,000,000

Results

Total Provision Required
$24,000,000.00
Provision On Impaired Assets
$20,800,000.00
Gross Impaired Assets
$68,000,000.00
Provision Coverage Of Impaired Assets
30.588%

Step by step

  1. 1Values used
  2. 2Provisioning
  3. 3Total Provision Required= 24,000,000.00
  4. 4Provision On Impaired Assets= 20,800,000.00
  5. 5Gross Impaired Assets= 68,000,000.00
  6. 6Provision Coverage Of Impaired Assets= 30.588

Assumptions and limits

  • The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation, tax, fees or charges or compounding frequency into account.
  • Figures are rounded for display to 3 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
  • 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.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

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.

Frequently Asked Questions

Why provide against performing loans?

Because some will default. A general provision recognises expected loss before any specific account deteriorates.

Do provisions reduce capital?

Specific provisions are charged to profit and so reduce retained earnings and capital directly.

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