Loan-to-Deposit Ratio
Total loans divided by total deposits.
Definition
The loan-to-deposit ratio indicates how much of a bank's deposits are deployed into loans. A ratio near 100% means nearly all deposits are lent out, leaving little liquidity cushion. Most well-run banks maintain ratios between 70% and 90%.
Formula
LTD Ratio = Total Loans / Total Deposits × 100
Why It Matters
A very high LTD ratio suggests the bank may need to raise more expensive wholesale funding. A very low ratio means the bank isn't fully deploying its cheap deposit funding, which may drag on profitability.