How to calculate the credit loading rate

The credit loading ratio is generally referred to as the **Loan Risk Loading Ratio**, which expresses the risk that a bank expects to incur for each dollar of loan lent.

Based on the definition of Loan Risk Loading Ratio, it can be expressed as the following formula:

Credit Loading Ratio = (Credit Risk Exposure - Credit Risk Mitigation)/Credit Risk Exposure

Wherein, Credit Risk Exposure refers to the amount of money that the bank lends out, and Credit Risk Mitigation refers to the various methods that the bank adopts to reduce the credit risk, such as guarantees, mortgages, pledges, etc.

With this formula, the Loan Risk Loading Ratio can be calculated, which helps the bank to control the risk better.