KPI for Measuring of % of Past Due Loans posted in category Banking

WinningKPI - Banking - KPI for Measuring of % of Past Due Loans posted in category Banking

This indicator is for measuring the past due loans as a % of the total due loans. In other words, this is measuring the % of loans that have missed a scheduled payment date. This KPI is calculated by dividing the total number of past due loans by the total number of due loans, in a given time period.
The bank aims to minimise this past due loans %, and interest charges are applied in order to avoid late payments. The higher the interest rates, the less likely the customer is to pay late.
However, the bank should carefully assess this figure and take it in consideration when approving loans.

Formula:
Total number of past due loans / Total number of due loans x 100

KPI Units: %

KPI Time Frame: update quarterly or annually

Posted by Oana Boteanu | Help to protect community: Flag for moderation

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Example:

A bank measures the % of past due loans over a one year period.

Total number of past due loans: 80
Total number of due loans: 500

% of Past Due Loans:
80/500 x 100 = 16%

Hence, the result shows that the bank’s past due loans accounts for a total of 16% of all loans due.
Past due loans incur a high cost for the bank, hence why interest charges are applied.
A bank processing a high number of Subprime mortgages may encounter a higher figure of past due loans.
Indentifying the reason for the late payments is crucial to putting in place measures to minimize this KPI.
Oana Boteanu | + | September 13, 2012 at 10:10 am

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