What Does the CAR Ratio in Banking Reflect?

"In the world of banking, a solid understanding of financial metrics is crucial not just for managers and regulators, but also for investors, analysts, and those concerned with financial system stability. Concepts like the Capital Adequacy Ratio (CAR), Non-Performing Loan Ratio (NPL ratio), and debt classification criteria based on overdue days are the 'health indicators' of a bank's performance and stability. These metrics provide valuable insights into a bank's financial health, risk management, and overall operational efficiency. So, let's delve into these concepts and decipher the language of banking metrics to enhance our understanding of this intricate industry."

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What Does the “Capital Adequacy Ratio” (CAR) in Banking Reflect?

  • Credit Growth Rate
  • Short-Term Solvency
  • Bank’s Capital Safety Level
  • Return on Equity

The Capital Adequacy Ratio (CAR) indicates a bank’s capital ratio relative to its risk-weighted assets. Also known as the Capital Ratio on Risk-Weighted Assets (CRAR), this ratio is monitored by regulatory authorities to assess a bank’s bankruptcy risk.

How Is the Non-Performing Loan Ratio (NPL Ratio) Calculated?

  • NPL / Total Equity
  • NPL / Total Assets
  • NPL / Total Loan Outstanding
  • NPL / Total Pre-Tax Profit

It’s calculated as NPL / Total Loan Outstanding

In the Banking System, What Is Typically Considered a “Non-Performing Loan”?

  • 30 days
  • 60 days
  • 90 days
  • 120 days

Non-performing loans are those that are overdue for more than 90 days.

Trạng Chứng

– 19:28 28/08/2025

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