Provision coverage ratio (also known as "provision adequacy ratio") is the utilization rate of bank loans that may occur when bad debt provision is made. The coverage ratio of non-performing loan provision is an important indicator to measure the adequacy of loan loss provision of commercial banks. This indicator reflects the risk degree of bank loans, socio-economic environment, integrity and other aspects from a macro perspective. According to the Risk Rating System of Joint-stock Commercial Banks (Provisional), the provision coverage ratio is the ratio of actual loan losses to non-performing loans, and the best state of this ratio is 100%. The provision coverage ratio is an important indicator of a bank, which examines whether the bank's finances are sound and whether the risks are controllable.

Provision coverage ratio = (general provision+special provision+special provision)/(subprime loan+doubtful loan+loss loan) × 100%.

For example, the loan balance of a bank is 65.438+0 billion, of which 9 billion is normal, 200 million is concerned, 500 million is secondary, 200 million is doubtful and 65.438+0 billion is loss, and its non-performing loan ratio is (5+2+654.38+0)/654.38+000 = 8%. Assuming that the special provision is excluded, according to the current regulations, the general loan loss reserve is accrued first = 100* 1%= 1 100 million, and then the special loan loss reserve is accrued according to the specified proportion: 2 * 2%+5 * 25%+2 * 50%+1* 60. Together with the total reserve, the total reserve should reach 429 million yuan. Suppose this bank really withdraws 429 million yuan as required, and the provision coverage ratio is 4.29/(5+2+ 1)=53.63%. If it withdraws 800 million yuan, the provision coverage ratio is100%. On the other hand, if only 400 million yuan is withdrawn, the provision coverage ratio is 50%, which can not meet the minimum requirement of proportional withdrawal, and the provision is seriously insufficient. For some banks, the CBRC requires the provision coverage ratio to reach 150%, which is a more prudent requirement than adequate provision (100%).