asset quality

Dictionary of Banking Terms for: asset quality
asset quality

estimation of the quality of bank assets (principally loans and leases) as measured by a lender’s credit standards, and the liquidity of securities held in the investment portfolio. If assets are packaged for resale to investors in the secondary market, the criterion for determining quality of assets is, “What can I expect to get in the market if I sell my loans?” In this context, asset quality has less to do with charge-off analysis than the marketability of the credit portfolio.

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