Blog · Finance metrics and formulas · Banking
Balance sheet ratios for banks connect lending, deposit funding, borrowings, available assets and accounting equity. Use a reconciled bank example to compare two quarters, explain the combined movement and assign the follow-up questions.
Balance sheet ratios for banks show how lending and other assets are supported by deposits, borrowings and equity. Read the measures together, using the same reporting date and entity. A rising equity share does not resolve a simultaneous decline in available assets or a shift toward borrowing.
Bring the closing balance sheet, loan-and-allowance summary, deposit totals, borrowing schedule and securities collateral report. Keep the reporting entity, date, currency and units with each export. The bank balance sheet explains the underlying statement; this page focuses on how its ratios work together.
The controller owns the accounting reconciliation. Treasury identifies available cash, pledged securities and borrowing classifications. The credit team confirms the loan and allowance basis. The asset/liability committee uses the combined findings to frame funding and balance-sheet decisions.
These are period-end management comparisons. That choice matters: the FFIEC UBPR percentage-composition guide uses average balances for many composition measures. Do not compare a closing-balance calculation with an average-balance measure as though the time bases were identical.
An invented US bank compares June 30 and September 30, 2026. Its loan schedule contains no held-for-sale loans or unearned-income adjustment. Net loans therefore equal the gross-loan balance less the allowance shown below. Deposits include all deposit categories; borrowings exclude deposits and contain all nondeposit borrowing liabilities in this example.
Treasury has classified the unencumbered securities as available for the management buffer used here. Pledged securities are unavailable for that buffer. Cash is available, with no restricted cash included. This simplified classification is not a regulatory high-quality-liquid-asset determination, and a real review must also consider sale proceeds, settlement timing and operational access.
| Asset export row | June 30 (USD) | September 30 (USD) |
|---|---|---|
| Available cash and bank balances | 80,000,000 | 60,000,000 |
| Available unencumbered securities | 120,000,000 | 100,000,000 |
| Pledged securities | 100,000,000 | 130,000,000 |
| Gross loans | 700,000,000 | 800,000,000 |
| Less: allowance for credit losses | -10,000,000 | -12,000,000 |
| Premises and other assets | 10,000,000 | 22,000,000 |
| Total assets | 1,000,000,000 | 1,100,000,000 |
| Funding and equity export row | June 30 (USD) | September 30 (USD) |
|---|---|---|
| Total deposits | 800,000,000 | 840,000,000 |
| Nondeposit borrowings | 100,000,000 | 140,000,000 |
| Other liabilities | 10,000,000 | 10,000,000 |
| Accounting equity | 90,000,000 | 110,000,000 |
| Total liabilities and equity | 1,000,000,000 | 1,100,000,000 |
The input rows are mutually exclusive. The gross loans and negative allowance combine to a net balance; the total-assets row is a control, not another amount to add. The same rule applies to the liabilities-and-equity total.
Build the needed asset subtotals before dividing:
| Subtotal | June 30 calculation (USD) | September 30 calculation (USD) |
|---|---|---|
| Net loans | 700,000,000 - 10,000,000 = 690,000,000 | 800,000,000 - 12,000,000 = 788,000,000 |
| All securities | 120,000,000 + 100,000,000 = 220,000,000 | 100,000,000 + 130,000,000 = 230,000,000 |
| Available cash and securities buffer | 80,000,000 + 120,000,000 = 200,000,000 | 60,000,000 + 100,000,000 = 160,000,000 |
Balance sheet ratio = Defined balance or subtotal / Defined comparison balance × 100
Every numerator below is a period-end balance from the tables. All denominators are period-end balances for the same bank and date. Percentages are rounded to two decimal places after calculating with the full amounts.
| Measure | June 30 calculation | September 30 calculation |
|---|---|---|
| Net loans / deposits | 690,000,000 / 800,000,000 = 86.25% | 788,000,000 / 840,000,000 = 93.81% |
| Net loans / assets | 690,000,000 / 1,000,000,000 = 69.00% | 788,000,000 / 1,100,000,000 = 71.64% |
| Available buffer / assets | 200,000,000 / 1,000,000,000 = 20.00% | 160,000,000 / 1,100,000,000 = 14.55% |
| Deposits / assets | 800,000,000 / 1,000,000,000 = 80.00% | 840,000,000 / 1,100,000,000 = 76.36% |
| Nondeposit borrowings / assets | 100,000,000 / 1,000,000,000 = 10.00% | 140,000,000 / 1,100,000,000 = 12.73% |
| Accounting equity / assets | 90,000,000 / 1,000,000,000 = 9.00% | 110,000,000 / 1,100,000,000 = 10.00% |
Each division in the table is multiplied by 100 to display a percentage. The FFIEC summary-ratio guide also distinguishes net loans to assets from net loans to deposits. The denominator changes the question: asset mix in the former, lending relative to deposit funding in the latter. See the dedicated loan-to-deposit ratio page for its detailed treatment.
The accounting identity is the first control:
Assets - Deposits - Borrowings - Other liabilities - Equity = 0
June is 1,000,000,000 - 800,000,000 - 100,000,000 - 10,000,000 - 90,000,000 = 0. September is 1,100,000,000 - 840,000,000 - 140,000,000 - 10,000,000 - 110,000,000 = 0.
The asset components must separately sum to the reported asset total. Reconcile gross loans and the allowance to their source schedules, and reconcile the two securities categories to the full securities ledger. A balancing statement alone cannot prove the collateral classifications are correct.
Keep the difference checks in the workbook. If a reconciliation fails, resolve missing accounts, duplicate subtotals or unit differences before circulating the percentages. A ratio can calculate perfectly from an incomplete export.
Net loans increased by 788,000,000 - 690,000,000 = $98,000,000 while deposits increased by 840,000,000 - 800,000,000 = $40,000,000. Lending now represents more of the asset base and more of the deposit base. Borrowings also increased by 140,000,000 - 100,000,000 = $40,000,000, taking a larger share of assets.
Meanwhile, the available buffer fell by 200,000,000 - 160,000,000 = $40,000,000. Total securities increased, but more were pledged. Looking only at the full securities balance would miss that change in availability.
Accounting equity to assets improved, which is a separate observation. These figures do not establish regulatory capital compliance, and the buffer ratio is not a liquidity coverage ratio. No universal safety threshold follows from the percentages shown.
Treasury should examine funding maturity and collateral needs; the credit team should explain the lending and allowance movement; finance should document the equity movement. Use flux analysis to organize the balance explanations. The interagency liquidity policy emphasizes cash-flow projections, funding diversity, liquid assets and contingency planning, which extend beyond these closing-balance ratios.
Profitability needs separate period-based inputs. A balance sheet alone cannot calculate return on assets, which also requires the matching earnings measure. Broader bank liquidity ratios provide context for the funding questions raised here.
Upload the balance sheet and matching loan, deposit, borrowing and collateral summaries; Covirage maps the columns, and its tools compute the defined ratios and check the reconciliations. The external AI model explains the combined movements with every figure traced to its rows. Create a free Covirage account and bring a sample of your own data.
See Covirage for commercial banking teams for the industry context.
Useful starting measures include loans to deposits, loans to assets, deposits to assets, borrowings to assets, accounting equity to assets and a clearly defined available-assets measure. Their relevance depends on the bank's business and reporting purpose; no short list captures every liquidity or credit risk.
Use the basis required by the named measure and preserve it across periods. Net loans reflect the specified allowance and other applicable adjustments; gross loans answer a different question. Reconcile the chosen numerator to the loan schedule and disclose its boundary.
Yes. Accounting equity relative to assets can rise while available cash declines, securities become pledged or borrowing reliance increases. Capital and liquidity describe different aspects of the balance sheet, so review the funding and asset measures alongside the equity percentage.