Page 8 - Bank Financials (I)
P. 8
Loan-to-Deposit Ratio:
This metric expresses a bank’s loans as a percent of
deposits. In doing so, its purpose is to measure liquidity.
Banks with a high ratio have less core funding to cover
withdrawals or other exigencies that arise. Banks with too
low of a ratio aren’t maximizing the spread between their
cost of funds and interest on earning assets.
