Loan to stable deposit ratio
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Bank prudential management.
(L/SD ratio).
A simple measure of a bank's funding profile, being a refinement of the (even simpler) loan to deposit (L/D) ratio.
The L/SD ratio divides the bank's loans by its stable deposits.
Deposits which are regarded as 'non stable' are excluded from the calculation.
Compared with the simpler loan to deposit ratio, the L/SD ratio provides a more representative measure of the bank's capacity to lend.
An even more refined measure is the Net Stable Funding Ratio (NSFR).
