Every term is defined twice: once the way a filing would put it, and once the way somebody would explain it to you across a table. The second one is usually the one that sticks.
Showing 2 terms
The allowance a lender carries against a loan from the day it is written, computed as the probability of default multiplied by the loss if default happens, applied to the exposure at that point.
A model output, not a measurement. Two lenders with the same borrowers can carry materially different numbers and both be perfectly compliant, which is why the notes also compare it with the regulator’s formula.
Credit-impaired loans under the expected credit loss framework — being more than ninety days overdue is treated as default unless the lender can demonstrate otherwise.
They cost a lender twice: the provision rises, and interest is thereafter recognised on the amount net of that provision, so income falls at the same moment the charge goes up.