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Webster's New World Finance and Investment Dictionary » loan-loss reserves
loan-loss reserves
loan-loss reserves definition - finance
Money that a bank sets aside to offset potential
losses from loans or other receivables that arenÂ’t paid. By setting aside money
for loan-loss reserves, a company lowers the amount of its quarterly profit.
However, when the actual losses occur, the company has set aside funds to be
able to cover the anticipated losses. As the economy weakens, companies
typically increase their loan-loss reserves.
Webster's New World Finance and Investment Dictionary Copyright © 2003 by Wiley Publishing, Inc., Indianapolis, Indiana.
Used by arrangement with John Wiley & Sons, Inc.
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