Loan-to-deposit (LTD) ratios, a common yardstick for measuring bank liquidity, have continued to fall in this year’s 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.
The biggest regional drop in LTD ratios is in Latin America and the Caribbean, where the aggregate has fallen by more than 28 percentage points to 85.82%. This is followed by western Europe, which dropped from 120.37% to 108.61%, a ratio lower than two years ago. Nonetheless, its LTD figure is still 7 percentage points higher than any other region.