# Loan Loss Provision

*Banking & Payments — Finicade finance glossary*

A loan loss provision is the charge a bank takes for loans it expects to go bad. Modern standards require expected losses to be recognised up front over the loan's life rather than waiting for evidence of impairment, which front-loads the cost of lending and makes provisions swing sharply with economic forecasts. Because they're estimates, provisions remain a central lever for smoothing reported earnings.

**Also known as:** credit loss provision, CECL, IFRS 9 provision

**Related terms:** [Non-Performing Loan](https://finicade.com/glossary/non-performing-loan), [Allowance for Doubtful Accounts](https://finicade.com/glossary/allowance-for-doubtful-accounts), [Credit Risk](https://finicade.com/glossary/credit-risk), [Non-GAAP Earnings](https://finicade.com/glossary/non-gaap-earnings), [Recovery Rate](https://finicade.com/glossary/recovery-rate)

Source: https://finicade.com/glossary/loan-loss-provision