Loan-to-Deposit Ratio
Also called: LDR, loans to deposits
The loan-to-deposit ratio compares a bank's loan book to its deposit base. Below 100% means deposits fund all lending; above means the gap is filled with wholesale funding, which is cheaper in good times and disappears in bad ones. Ratios well above 100% preceded the failures of Northern Rock and several others, making it one of the simplest early-warning ratios in banking.
Formula
LDR = Total loans ÷ Total deposits