Work out loan loss provision instantly with clear inputs, formula shown and shareable results.
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.
Provisioning
Provision = 0.4% standard + 15% sub-standard + 40% doubtful + 100% loss
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.
Because some will default. A general provision recognises expected loss before any specific account deteriorates.
Specific provisions are charged to profit and so reduce retained earnings and capital directly.