medium · Corporate Credit Analysis cca-core
A bank has $1,000M in corporate loans and an Allowance for Loan Losses (ALL) of $20M.
If Non-Performing Loans (NPLs) increase from $15M to $30M, what is the bank's NPL coverage ratio and what does it suggest?
- 66.7%; suggests the bank may need to increase its provisions.
- 2.0%; suggests the bank's asset quality is extremely high.
- 150.0%; suggests the bank is over-reserved for its current risks.
- 3.0%; suggests the bank is facing a liquidity crisis.
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