What is the Loan:Deposit Ratio?
Join Tim as he explains the advantages and disadvantages of the Loan:Deposit ratio. He explores how the ratio is calculated, used and also some of the limitations of using it.
Overview
The loan: deposit ratio compares the size of a bank’s loan book to its deposits to analyse the bank’s funding strategy. Funding can come from customer deposits or the wholesale markets. This measure is not without inconsistencies however, as it is not always a perfect measure.
Key learning objectives:
The question the loan: deposit ratio is asking
The differences and implications of how banks fund their loans
Potential issues with the loan: deposit ratio
Summary
Expert
Tim Skeet
Banker with more than 35 years experience in the financial markets. Tim has been an ICMA board member and an ECBC steering committee member. Tim is a Freeman of the City of London.
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