Asset quality

 ( Banking Terms ) 

Asset quality is an evaluation of asset to measure the credit risk associated with it.

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Description Asset quality is related to the left-hand side of the bank balance sheet. are concerned with the quality of their since that provides earnings for the bank. Loan quality and asset quality are two terms with basically the same meaning.

and T-bills are considered as good quality loans whereas , to low credit score firms etc. are bad quality loans. A bad quality loan has a higher probability of becoming a non-performing loan with no return.

Bank management components are:

1. Asset management
2. Liquidity management
3. Liability management
4. Capital adequacy management
5. Risk management

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See also

• Risk-weighted asset
• CAMELS ratings
• Bank condition
• Banking regulation

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