What are the liquidity ratios for banks?

The liquidity coverage ratio is the requirement whereby banks must hold an amount of high-quality liquid assets that’s enough to fund cash outflows for 30 days. 1 Liquidity ratios are similar to the LCR in that they measure a company’s ability to meet its short-term financial obligations.

How do you Analyse liquidity of a bank?

This ratio is calculated by dividing a bank’s high-quality liquid assets, or HQLA, into its total net cash over a 30-day period. This ratio must be 100% or higher for banks to be compliant with the regulation. A cornerstone of the liquidity cover ratio is the concept of high-quality liquid assets.

What is liquidity analysis ratio?

A liquidity ratio is a type of financial ratio used to determine a company’s ability to pay its short-term debt obligations. A ratio greater than 1 (e.g., 2.0) would imply that a company is able to satisfy its current bills. In fact, a ratio of 2.0 means that a company can cover its current liabilities two times over.

What are the financial ratios used in banks?

Check the financial health of your bank with these 8 ratios

• Is your bank safe?
• ​Gross non-performing assets (NPAs)
• Net NPAs.
• ​Provisioning coverage ratio.
• ​Capital adequacy ratio.
• ​CASA ratio.
• Credit-deposit ratio.
• Net interest margin.

What do you need to know about liquidity ratios?

Here is some information that will help you understand bank liquidity ratios and why they should factor into your decision about where to bank. A liquidity ratio has to do with the amount of cash and cash assets that a banking institution has on hand for conversion. Not all assets are classed as cash assets.

What’s the minimum liquidity ratio for an internationally active bank?

As of January 1, 2019, the minimum liquidity coverage ratio required for internationally active banks is 100%. In other words, the stock of high-quality assets must be at least as large as the expected total net cash outflows over the 30-day stress period.

What is the minimum liquidity ratio for BBVA?

As of January 1, 2019, the minimum liquidity coverage ratio required for internationally active banks is 100%. In other words, the stock of high-quality assets must be at least as large as the expected total net cash outflows over the 30-day stress period. BBVA comfortably meets this requirement.

What does LCR and Liquidity Coverage Ratio Mean?

LCR, liquidity coverage ratio The LCR measures a bank’s liquidity risk profile, banks have an adequate stock of unencumbered high-quality liquid assets that can be easily and immediately converted in financial markets, at no or little loss of value.