Loan to stable deposit ratio

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Bank prudential management

(L/SD ratio).

A simple measure of a bank's funding profile, being a refinement of the (even simpler) loan to deposit (L/D) ratio.

The L/SD ratio divides the bank's loans by its stable deposits.

Deposits which are regarded as 'non stable' are excluded from the calculation.

Compared with the simpler loan to deposit ratio, the L/SD ratio provides a more representative measure of the bank's capacity to lend.

An even more refined measure is the Net Stable Funding Ratio (NSFR).

See also