Translation: Loan-to-Deposit Ratio (LDR) = Loan-to-Deposit Ratio
The Loan-to-Deposit Ratio (LDR) measures the volume of loans a bank has issued relative to its total deposits. It is used to assess the bank’s liquidity and how much it relies on customer deposits to fund its lending activity.

Simple definition:
Imagine you have a safe where people deposit their money (deposits), and you lend some of it to people who need it (loans). If people deposit 100 riyals and you lend out 80 riyals, your ratio is 80%. But if you lend out 95 riyals and several depositors want to withdraw their money at the same time, you may not have enough left to repay them. This ratio tells you how much you have lent compared with your deposits—in other words, how much of a safety cushion you have kept for yourself.

Note:
This ratio distinguishes between "lending volume" and "liquidity levels." A higher ratio means more lending and potentially higher profits, but less liquidity and a narrower safety cushion. A lower ratio means more liquidity, but also unrealized lending opportunities. Regulators set an upper limit: in Saudi Arabia, SAMA expects banks to keep the ratio below 90%. It calculates the ratio using a weighted method that adds certain long-term debt instruments to the denominator. As a result, the regulatory ratio may differ from the unadjusted ratio calculated by analysts.

Example:
Suppose a bank has deposits worth SAR 1 billion and plans to issue loans worth SAR 800 million. Its expected ratio would be: 800 ÷ 1,000 = 80%.
In reality, deposits remained at SAR 1 billion, but the bank issued loans worth SAR 920 million, bringing the actual ratio to: 920 ÷ 1,000 = 92%.
The ratio has risen by 12 percentage points despite deposits remaining unchanged, exceeding the assumed regulatory limit of 90%. Although the bank’s income from loan interest has increased, it now needs to attract new deposits, issue debt instruments, or slow lending. Each option raises its costs or limits its growth.

What does this mean for you?
A clearer picture of liquidity: It shows that loan growth does not always mean a bank is strong; how much a bank lends relative to its deposits matters just as much as the volume of its lending.
Insight into bank funding: It helps you understand whether a bank is funding its growth through customer deposits or needs higher-cost funding sources, which affects its profit margin.
More accurate comparisons between banks: It explains why some banks have more room to expand lending while others are close to the regulatory limit, even when their loan volumes are similar.

Frequently asked question:
Is the "Loan-to-Deposit Ratio" the same as the "Liquidity Coverage Ratio (LCR)"?
Answer: No. The "Loan-to-Deposit Ratio" measures lending volume relative to deposits. The "Liquidity Coverage Ratio" measures whether a bank holds enough high-quality liquid assets to cover expected withdrawals over 30 days. In other words, the first answers the question, "How much have we lent compared with our deposits?" The second answers, "Do we have enough liquidity to withstand withdrawals during a crisis?"