---
title: "Net Stable Funding Ratio: definition, formula, and thresholds"
description: "The Net Stable Funding Ratio (NSFR) measures whether a bank's long-term assets are matched by long-term funding sources. It is the structural complement to the 30-day Liquidity Coverage Ratio under Basel III."
canonical_url: https://www.bankregreports.com/glossary/net-stable-funding-ratio/
source: BankRegReports
category: "Liquidity & Balance Sheet"
units: "%"
schedule: "FR 2052a / Pillar 3"
---

# Net Stable Funding Ratio

> The Net Stable Funding Ratio (NSFR) measures whether a bank's long-term assets are matched by long-term funding sources. It is the structural complement to the 30-day Liquidity Coverage Ratio under Basel III.

## Formula

```
NSFR = Available Stable Funding / Required Stable Funding
```

Available Stable Funding (ASF) weights liabilities by maturity and counterparty stickiness. Capital counts at 100%, stable retail deposits at 95% and less-stable retail deposits at 90%, short-term wholesale funding at 0-50%. Required Stable Funding (RSF) weights assets by liquidity and maturity. Cash counts at 0%, long-dated loans to corporates at 85-100%.

## Why it matters

The NSFR addresses what brought down Lehman and Bear Stearns: funding billion-dollar balance sheets with overnight repo. It forces large banks to match their asset duration with funding duration over a one-year horizon, raising the cost of funding long-dated assets with short-dated wholesale money.

## How to read it

An NSFR at or above 100% is the regulatory requirement; 110%+ indicates a meaningfully long-funded balance sheet. Banks with NSFRs near 100% are running closer to the constraint and have less freedom to expand long-dated lending without lining up new term funding.

## Thresholds

| Range | Reading | What it means |
|---|---|---|
| ≥ 110% | Comfortable | Long-funded balance sheet. |
| 100–110% | Adequate | Meets minimum. |
| 90–100% | Watch | Below minimum; remediation required. |
| < 90% | Concern | Severe maturity mismatch. |


## Worked example

Bank of America reported an NSFR of approximately 115% at year-end 2024. Roughly $2.0T of available stable funding (retail deposits + long-term debt + equity) supported about $1.75T of required stable funding (loans + securities + other less-liquid assets).

## Questions

### Who reports the NSFR?

Category I and II US banks must meet 100%. Category III banks meet 100% if they have $75 billion or more of weighted short-term wholesale funding and 85% otherwise. Category IV banks meet 70% if they have $50 billion or more of weighted short-term wholesale funding and are otherwise not subject to it. Smaller banks are not subject to the NSFR.

### Does the NSFR penalize deposit-funded community banks?

No. Retail and small-business deposits get high stable-funding weights (95%+), so a community bank funded by core deposits would easily pass NSFR, which is why the rule only applies at scale.

### How is NSFR different from LCR?

LCR is a 30-day acute liquidity stress test. NSFR is a 1-year structural funding-maturity test. Both must be met; they constrain different dimensions of liquidity risk.

## Sources

- [12 CFR Part 249 Subpart K: Federal Reserve NSFR rule](https://www.ecfr.gov/current/title-12/part-249)
- Basel III NSFR standard (BCBS)

## Related metrics

- [Liquidity Coverage Ratio](https://www.bankregreports.com/glossary/liquidity-coverage-ratio/): The liquidity coverage ratio (LCR) is a bank's stock of high-quality liquid assets divided by its projected net cash outflows over a 30-day stress period. US rules require large banks to keep it at or above 100%, or a reduced level for some, so they can survive a month-long run without new funding.
- [Total Borrowings](https://www.bankregreports.com/glossary/total-borrowings/): Total borrowings are a bank's wholesale, non-deposit funding: Federal Home Loan Bank advances, fed funds purchased, repurchase agreements, and subordinated debt. They supplement deposits but are costlier and more confidence-sensitive.
- [Core Deposits](https://www.bankregreports.com/glossary/core-deposits/): Core deposits are a bank's stable, relationship-based funding (checking, savings, and smaller time deposits) excluding rate-sensitive jumbo CDs and brokered money. They are the cheapest and stickiest funding a bank has.
- [Loan-to-Deposit Ratio](https://www.bankregreports.com/glossary/loan-to-deposit/): The loan-to-deposit ratio (LTD) is a bank's total loans divided by its total deposits, expressed as a percentage. It shows how much of the bank's deposit funding is lent out rather than held in cash and securities.

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