Provision Coverage Ratio Calculator

Work out provision coverage ratio instantly with clear inputs, formula shown and shareable results.

About Provision Coverage Ratio Calculator

Provision coverage is the share of impaired loans already written down through the profit and loss account. A high ratio means future write-offs are largely absorbed, so reported profits are less exposed to legacy problems.

Formula

Provision coverage

PCR = provisions held / gross NPA; shortfall = target × gross NPA - provisions

Worked example

With the default values below, Provision Coverage Ratio Calculator returns Provision Coverage Ratio of 62.500%. Change any input above and every figure here is recalculated in your browser.

Inputs used

Provisions Heldminimum 0: 45,000,000
Gross Non-Performing Assetsminimum 0: 72,000,000
Target Coverageaccepts 20–100 %: 70 %

Results

Provision Coverage Ratio: 62.500%
Unprovided Impaired Exposure: $27,000,000.00
Additional Provision To Reach The Target: $5,400,000.00
Assessment: Coverage below the target

Step by step

1Values used
2Provision coverage
3Provision Coverage Ratio= 62.500
4Unprovided Impaired Exposure= 27,000,000.00
5Additional Provision To Reach The Target= 5,400,000.00
6Assessment= Coverage below the target

Assumptions and limits

The result is derived only from the 3 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

What coverage level is considered sound?

Regulators and analysts commonly look for 70% or more, higher for unsecured exposures.

Can coverage be too high?

It depresses current profit, but it also front-loads pain and makes recoveries flow straight to earnings later.