Net Stable Funding Ratio Calculator
Compute a bank's Net Stable Funding Ratio (NSFR): NSFR = available stable funding (ASF) ÷ required stable funding (RSF) × 100%, a measure of medium-term funding stability.
Input Data
Results
At a glance:NSFR promotes medium-term funding stability. NSFR = available stable funding (ASF) ÷ required stable funding (RSF) × 100%. ASF captures sources that stay for a year or more, weighted by ASF factors; RSF captures the funding needed to support assets, weighted by RSF factors. A ratio of 100% or above meets the standard.
Formula
NSFR = available stable funding ÷ required stable funding × 100%.
$$NSFR = \dfrac{ASF}{RSF} \times 100\%$$$$NSFR \geq 100\%\ (\text{Basel III minimum})$$How to Use
- Enter the available stable funding (ASF).
- Enter the required stable funding (RSF).
- Read the NSFR; it should be at least 100%.
FAQ
What is the Net Stable Funding Ratio (NSFR) and what problem does it solve?
NSFR is a regulatory gauge of a bank's medium-term (about one year) funding stability. It answers: 'Are the funding sources backing this bank's assets stable and reliable enough to last?' The formula is NSFR = available stable funding (ASF) ÷ required stable funding (RSF) × 100%; for example ASF of HK$11 billion and RSF of HK$10 billion gives 110%. NSFR targets a fundamental banking risk — 'maturity mismatch', in plain terms 'borrowing short to lend long'. Banks take in short-term money (demand deposits) and lend it out as long-term assets (multi-year mortgages). Some maturity transformation is normal, but over-reliance on volatile short-term wholesale funding to back illiquid long-term assets is dangerous: if those short-term sources dry up, the funding chain breaks. NSFR forces banks to lengthen and stabilise their funding, structurally reducing that mismatch. Where LCR is the buffer against short, acute liquidity shocks, NSFR is the check-up for long-term structural imbalance.
How are available stable funding (ASF) and required stable funding (RSF) computed?
Neither is a simple sum — each item is weighted by a factor reflecting its stability or liquidity, which is the key to NSFR. The numerator ASF measures how stable the funding sources are (how little they flee within a year). Each liability and equity item is multiplied by an ASF factor from 0% to 100%: the more stable, the higher the factor. Capital (equity) is most stable (factor ~100%); long-term debt (over one year) gets a high factor; sticky retail deposits get a high factor (e.g. 90-95%); volatile interbank/wholesale funding gets a very low or zero factor. The denominator RSF measures how much stable funding the assets need, based on liquidity and term: each asset/off-balance-sheet item is multiplied by an RSF factor — the harder to sell and the longer the term, the higher the factor. Cash and central-bank reserves need almost no stable funding (factor near 0); high-quality liquid government bonds get a low factor; long-term illiquid loans (multi-year mortgages, corporate loans) get a high factor (up to 65-100%). ASF ÷ RSF gives NSFR. The factor design rewards stable funding and liquid assets, and penalises unstable funding and illiquid long-term assets. (Actual factors are set by regulation; this calculator uses the already-weighted totals for illustration.)
What NSFR is required, and how does it work with LCR?
Under Basel III, a bank's NSFR must be at least 100% — meaning its available stable funding must at least equal the stable funding its assets require, so it is not propping up long-term assets with unstable short-term money. Below 100% signals a maturity-mismatch risk. NSFR and the Liquidity Coverage Ratio (LCR) are the two complementary engines of Basel III's liquidity framework: LCR focuses on the short term (enough high-quality liquid assets to survive 30 days of stress), while NSFR focuses on the long term (about a year) — the structural stability of funding. LCR checks 'can the bank survive next month's emergency?'; NSFR checks 'is the bank's financial structure sound for the long haul?'. Good LCR but poor NSFR means safe short-term but fragile structurally; good NSFR but poor LCR means sound structure butmay be unable to survive a sudden shock. Both are required. (See also the LCR calculator.)
If NSFR falls below 100%, how would a bank adjust?
Below 100% means ASF cannot cover RSF, revealing a 'borrow short, lend long' mismatch; the bank adjusts by 'growing the numerator, shrinking the denominator'. To grow ASF (more stable funding): issue more long-term debt or capital, replace short wholesale funding with funding over one year, and attract sticky retail deposits (high ASF factor). To shrink RSF (less need for stable funding): hold more cash and high-quality liquid government bonds (near-zero RSF factor), reduce or sell long-term illiquid assets, and curb excessive long-term loan expansion. In practice these are combined and monitored through asset-liability management (ALM). Note that the ASF/RSF factors are set by regulators and interact, so adjustments trade off against profitability — lengthening funding usually costs more, while holding low-yielding liquid assets drags returns — so banks balance compliance with profit.
Do banks in Hong Kong have to comply with NSFR?
Yes, on a tiered basis. The HKMA has localised Basel III's NSFR through the Banking (Liquidity) Rules. Like LCR, the HKMA applies tiered requirements by size and complexity: the larger, systemically important 'Category 1 institutions' must meet the full NSFR (minimum 100%), while smaller 'Category 2 institutions' apply a simplified 'Core Funding Ratio (CFR)' as the corresponding medium-term funding-stability requirement, in line with proportionality and to ease compliance. For ordinary depositors and investors, a bank meeting NSFR has a more robust, shock-resistant funding structure — one reference point when judging a bank's safety. This calculator is for conceptual teaching and rough estimation only; actual compliance involves the detailed ASF/RSF factors and audited data per the HKMA rules.
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References
Content review: Calculatorism Finance Team. Results are for reference only; please refer to the relevant authorities for the official figures.