I am doing financial health analysis for banks. The health checks involved are:
- Bad Loan provisions > actual Bad Debts written off ?
I check across financial statements, there are 3 related fields:
- Income statement - Provision for credit losses
- Balance Sheet - Allowance for loan & lease losses
- Cash Flow - Provision for loan losses
From above, which are Bad loan provision & actual Bad Debts written off ? Do I have to also consider any figure from previous year's reports?
Level of bad loans (Net Charge Off Ratio < 3%)
Bad Loans written off / Total loans < 3%
Similarly, how to get Bad Loans written off from financial statements?