According to China Economic Net, the non-performing loan ratio is one of the important indicators to evaluate the security of credit assets of financial institutions. Non-performing loan ratio refers to the proportion of non-performing loans of financial institutions to the total loan balance. Non-performing loans are divided into five categories according to the risk basis: normal, concerned, secondary, suspicious and loss, of which the latter three categories are collectively referred to as non-performing loans.

On February 3, 2023, the data of China Banking Regulatory Commission showed that the NPL ratio of banking financial institutions at the end of 2022 was 1.7 1%. The higher the non-performing loan ratio, the greater the proportion of loans that may not be recovered in the total loans; The low rate of non-performing loans means that the proportion of loans that financial institutions can't recover is smaller. The calculation formula of NPL ratio is as follows: NPL ratio = (subprime loan+doubtful loan+loss loan)/various loans × 100%= loan provision ratio/provision coverage ratio × 100%.