According to China's Guidelines on Provision for Bank Loan Losses, banks should make provision for general reserves on a quarterly basis, and the year-end balance of general reserves should not be less than 65,438+0% of the year-end loan balance. Banks can draw special reserves quarterly with reference to the following proportions:

For concern loans, the provision ratio is 2%.

For subprime loans, the provision ratio is 25%.

For doubtful loans, the provision ratio is 50%.

For loss loans, the provision rate is 100%.

Among them, the loss reserve for subprime and doubtful loans can be floating by 20%. The special reserve is determined by the bank according to the special risk status, risk loss probability and historical experience of different types of loans (such as countries and industries).

The indicator of provision coverage ratio is the provision for bad debts and bad debts that may occur in bank loans. It is an aspect of bank's prudence in screening and preventing risks, and it is also a quantitative index reflecting the authenticity of performance. The lower the ratio, the better. The smaller the reaction loss, the higher the profit. The higher the ratio, the greater the risk, the greater the loss and the smaller the profit. The level of provision ratio should be adapted to the degree of loan risk, and it should not be too low to lead to insufficient provision and inflated profits; Nor should it be too high, resulting in excess provision and a virtual decline in profits.

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 loan loss provision to non-performing loans, and the best state of this ratio is 100%. This is actually to evaluate whether the loan loss reserve is sufficient from another angle, so as to judge who has the greatest performance.