What is a good loan to deposit ratio?


Quick Answer

A good loan to deposit ratio for a bank is between 80 and 90 percent as of 2014, according to Forbes. An 80 percent ratio means for every $1 a bank receives in deposits it loans 80 cents to businesses or consumers.

Continue Reading

Full Answer

A state-by-state analysis of LTD ratios in 2008 showed a range of 56 percent in Utah and 170 percent in North Dakota, reports Investopedia. When a bank has a ratio well below the 80 to 90 percent range, it may be missing income-generating opportunities. In contrast, banks that operate with a much higher LTD face liquidity risks in funding profitable loan opportunities in the near future.

Learn more about Credit & Lending

Related Questions