Funding lending activities through deposits is a prudent strategy – as opposed to short-term capital markets fundraising products. The loans-to-deposit (LTD) ratio provides an indication of how exposed to alternative funding strategies banks are.
Last year, western European lenders had the highest regional average LTD figure of 125.39%. However, based on a sample of 882 banks, this figure has now declined to 116.72%, leaving central Asian banks with the largest ratio – an average of 119.87%. Third highest was the Latin American region, which saw average LTD ratio climb from 98.94% in 2011 to 112.33% this year as a result of high levels of lending.
