Loan-to-deposit (LTD) ratios, a common yardstick for measuring bank liquidity, have seen a mixed performance in the 2018 Top 1000 World Banks rankings. The aim is to find a happy medium between a high LTD ratio, which suggests a bank may struggle to cover unforeseen needs, and a low ratio, which indicates it may not be making the most of its deposit base.
Global regulators have been encouraging banks to hold more deposits relative to loans, aiming to make banks more resilient. They tend to favour more ‘sticky’ retail deposits over short-term funding such as money markets.