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Nonperforming loans net of provisions to capital is calculated by taking the value of nonperforming loans (NPLs) less the value of specific loan provisions as the numerator and capital as the denominator. Capital is measured as total capital and reserves in the sectoral balance sheet; for cross-border consolidated data, total regulatory capital can also be used. This FSI is a capital adequacy ratio and is an important indicator of the capacity of bank capital to withstand losses from NPLs.
FSI data can be found in the Financial Soundness Indicators dataset.
