Calculate net charge-off rate by segment
Enter each segment’s balances, gross charge-offs and recoveries for a period. See the annualised net charge-off rate for the book and each segment, and which segments run above your appetite.
Net charge-off rate
The book’s net charge-off rate is 2.49%, inside your 3.00% appetite. Cards and BNPL run above it, and Cards carries 43.0% of the net charge-offs on 19.9% of the balance.
Charge-off rates by segment
Pale bars show the annualised gross charge-off rate. The bars in front show the net rate after recoveries, with red marking rates above the dashed appetite line.
Segment results
| Segment | Average balance | Gross charge-offs | Recoveries | Net charge-offs | Gross charge-off rate | Net charge-off rate | Recovery share | Share of balance | Share of net charge-offs |
|---|---|---|---|---|---|---|---|---|---|
| Cards | €188,000,000 | €11,500,000 | €1,400,000 | €10,100,000 | 6.12% | 5.37% | 12.2% | 19.9% | 43.0% |
| Personal loans | €246,000,000 | €7,800,000 | €1,900,000 | €5,900,000 | 3.17% | 2.40% | 24.4% | 26.0% | 25.1% |
| Car loans | €304,000,000 | €4,100,000 | €1,800,000 | €2,300,000 | 1.35% | 0.76% | 43.9% | 32.2% | 9.8% |
| BNPL | €53,000,000 | €3,200,000 | €200,000 | €3,000,000 | 6.04% | 5.66% | 6.3% | 5.6% | 12.8% |
| SME loans | €154,000,000 | €2,900,000 | €700,000 | €2,200,000 | 1.88% | 1.43% | 24.1% | 16.3% | 9.4% |
| Book | €945,000,000 | €29,500,000 | €6,000,000 | €23,500,000 | 3.12% | 2.49% | 20.3% | 100.0% | 100.0% |
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Use each segment’s limits in the credit decision. Tighten a segment above appetite at the next application. Start free
View the formulas
Average balance = (Opening balance + Closing balance) ÷ 2 Net charge-offs = Gross charge-offs − Recoveries Gross charge-off rate = Gross charge-offs ÷ Average balance × 12 ÷ Months covered Net charge-off rate = Net charge-offs ÷ Average balance × 12 ÷ Months covered Recovery share = Recoveries ÷ Gross charge-offs
Average balance is the mean of opening and closing balances. Your appetite is your own figure, separate from accounting and regulatory figures.
Calculate net charge-off rate
Net charge-off rate compares net charge-offs with average balance. Net charge-offs are gross charge-offs less recoveries, and the tool annualises the rate for the period entered.
A book-wide rate can sit within appetite while individual segments exceed it. Compare each segment’s rate with your appetite and see which one carries the largest share of net charge-offs.
Net charge-off rate FAQs
How do you calculate net charge-off rate?
Subtract recoveries from gross charge-offs to get net charge-offs. Divide by average balance and annualise the rate for the period.
What is the difference between gross and net charge-offs?
Gross charge-offs are the charge-offs before recoveries. Net charge-offs are gross charge-offs less recoveries.
How do you annualise a quarterly charge-off rate?
Divide the charge-offs by average balance to get the rate for the period. Annualise it by multiplying by twelve and dividing by the months covered.
What average balance do you use for charge-off rate?
Use the mean of the opening and closing balances for the period. The calculator works this out for each segment and the book.
Why can a book’s charge-off rate hide segments above appetite?
The book-wide rate combines the results across segments, so it can sit within appetite while some segments run above it. Compare the segment rates with your own appetite to see where they stand.