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Finance & Banking vocabulary · Risk Management

Non-performing loan

Meaning in finance & banking, with examples

nounCommon term

In finance & banking, non-performing loan means: A loan on which the borrower has stopped making payments, usually for 90 days or more, or which is unlikely to be repaid in full.

In Turkish: takipteki kredi, sorunlu kredi, tahsili gecikmiş alacak

How it is used

Often shortened to NPL. Analysts watch the NPL ratio (non-performing loans divided by total loans) as a sign of asset quality. Banks sell, restructure, provision for or write off NPLs.

Example sentences

  1. The bank's non-performing loan ratio rose to 3 percent.

  2. We sold a portfolio of non-performing loans to an asset management company.

Common collocations

  • NPL ratio
  • non-performing loan portfolio
  • sell non-performing loans
  • rise in non-performing loans
  • defaultFailure to make loan or bond payments as agreed. A borrower is usually treated as in default after missing payments for a set period, often 90 days.
  • provisionAn amount a bank sets aside from its profit to cover expected losses on loans that may not be repaid.
  • write offTo remove a debt or asset from the accounts because it has no value or will not be recovered, and record the amount as a loss.
  • credit riskThe risk that a borrower or another party will not pay back money it owes on time or in full, causing a loss for the lender.

More terms: Risk Management

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This page explains English vocabulary for learners. It is not financial advice.