--- title: "Pre-Provision Net Revenue: definition, formula, and thresholds" description: "PPNR stands for pre-provision net revenue: a bank's net interest income plus noninterest income minus noninterest expense. It is what the bank earns before it sets aside provisions for credit losses and pays income tax, so it measures the earnings available to absorb loan losses." canonical_url: https://www.bankregreports.com/glossary/pre-provision-net-revenue/ source: BankRegReports category: "Profitability" units: "%" schedule: "Schedule RI" --- # Pre-Provision Net Revenue > PPNR stands for pre-provision net revenue: a bank's net interest income plus noninterest income minus noninterest expense. It is what the bank earns before it sets aside provisions for credit losses and pays income tax, so it measures the earnings available to absorb loan losses. ## Formula ``` PPNR = Net Interest Income + Noninterest Income − Noninterest Expense ``` PPNR leaves out the two most volatile lines of the income statement: the provision for credit losses, which depends on economic forecasts and CECL modeling, and income tax, which depends on tax status and timing. What remains is the run rate of the banking franchise. On the Call Report the three inputs are Schedule RI items 3, 5.m and 7.e. Realized gains and losses on securities (items 6.a and 6.b) sit outside noninterest income, so a PPNR built from these items already excludes them. Income before taxes is PPNR minus the provision plus those securities gains or losses. ## Why it matters PPNR is the first line of defense against credit losses: a bank pays for its loan losses out of PPNR before it touches capital. That is why the Federal Reserve's supervisory stress tests (DFAST and CCAR) project PPNR for every bank under each scenario and set it against projected losses. Analysts use PPNR to assets as a profitability comparison that is not distorted by one bank building reserves while another releases them, or by differences in tax status. ## How to read it PPNR / average assets above 1.5% is strong for a US bank; 1.0-1.5% is typical; below 1.0% raises concern about franchise viability. The trend matters as much as the level: a falling PPNR ratio signals margin compression, fee weakness, or efficiency deterioration. Compare PPNR with the provision: a bank whose quarterly provision is a small fraction of its PPNR has a wide cushion, while one whose provision approaches its PPNR is close to a loss. ## Thresholds | Range | Reading | What it means | |---|---|---| | ≥ 1.5% | Strong | High underlying earnings power. | | 1.0–1.5% | Typical | Median US bank range. | | 0.5–1.0% | Weak | Marginal franchise economics. | | < 0.5% | Concern | Insufficient earnings to absorb normal credit losses. | ## Worked example Wells Fargo Bank, N.A. reported net interest income of $13,291 million and noninterest income of $6,186 million for the quarter ended June 30, 2026, against noninterest expense of $10,339 million. PPNR = $13,291 million + $6,186 million − $10,339 million = $9,138 million for the quarter, or $36,552 million annualized. Divided by average total assets of $1,877,302 million, that is a PPNR ratio of 1.95%, in the Strong band. ## Questions ### What does PPNR stand for? PPNR stands for pre-provision net revenue. "Pre-provision" means before the provision for credit losses, the expense a bank books to build its loan loss reserve. Some banks and analysts call the same figure pre-tax, pre-provision income. ### What is the PPNR formula? PPNR = net interest income + noninterest income − noninterest expense. On the Call Report these are Schedule RI items 3, 5.m and 7.e. Divide an annualized PPNR by average total assets to compare banks of different sizes. ### What does PPNR mean in banking? It means the profit a bank makes from lending, deposits and fees after paying its operating costs, before credit losses and taxes. A bank with high PPNR can absorb more loan losses out of current earnings without eating into capital. ### What is PPNR modeling? PPNR modeling is the stress-testing practice of projecting a bank's net interest income, noninterest income and noninterest expense over several quarters under baseline and adverse economic scenarios. The projected PPNR is set against projected credit losses to see how far capital would fall. Large banks build these models for the Federal Reserve's DFAST and CCAR exercises, and smaller banks use the same approach in their own capital planning. ### Why does PPNR exclude the provision for credit losses? Because the provision is a forward-looking estimate that depends on macro forecasts under CECL, not on current-quarter operating activity. Excluding it isolates the operating run-rate from credit-cycle volatility. ### Is PPNR a GAAP measure? No. PPNR is a regulatory/analytical measure assembled from GAAP income-statement lines. It is not a line item on either GAAP financials or call reports. It must be computed. ### What is the difference between PPNR and net income? Net income is PPNR minus the provision for credit losses, plus or minus securities gains and losses, minus income tax. Two banks with the same PPNR can report very different net income in a quarter when one is building reserves and the other is releasing them. ## Sources - [FFIEC Call Report Schedule RI (Income Statement)](https://www.ffiec.gov/sites/default/files/data/reporting-forms/FFIEC031_FFIEC041_202606_i.pdf) (PDF) - Federal Reserve CCAR / DFAST disclosures ## Related metrics - [Net Interest Income](https://www.bankregreports.com/glossary/net-interest-income/): Net interest income (NII) is the difference between the interest a bank earns on loans and securities and the interest it pays on deposits and borrowings. It is the core profit engine of traditional banking and the numerator behind net interest margin. - [Noninterest Income](https://www.bankregreports.com/glossary/noninterest-income/): Noninterest income is revenue a bank earns outside of interest: service charges, interchange and card fees, wealth and fiduciary fees, mortgage banking, and trading. It diversifies the revenue base away from the rate-sensitive spread. - [Noninterest Expense](https://www.bankregreports.com/glossary/noninterest-expense/): Noninterest expense (also called overhead) is what it costs to run the bank: salaries and benefits, occupancy and equipment, technology, and FDIC assessments. It is the numerator of the efficiency ratio. - [Provision for Credit Losses](https://www.bankregreports.com/glossary/provision-credit-losses/): The provision for credit losses is the expense a bank records to build or maintain its allowance for credit losses. Under the CECL standard it reflects expected lifetime losses, and it sits between revenue and net income on the income statement. - [Efficiency Ratio](https://www.bankregreports.com/glossary/efficiency-ratio/): A bank's efficiency ratio is its noninterest expense divided by its net interest income plus its noninterest income, expressed as a percentage. It shows how many cents the bank spends to earn each dollar of revenue, so a lower ratio is better. - [Return on Assets](https://www.bankregreports.com/glossary/roa/): Return on assets (ROA) is a bank's annualized net income divided by its average total assets, expressed as a percentage. It shows how much profit the bank earns on each dollar of its balance sheet, whatever its size or capital structure. ## About this document This is the markdown twin of the page named in `canonical_url` above. Source filings are public record; the cleaning, normalization, cross-source linkage, and derived metrics are BankRegReports' own. Attribute with a link to the canonical URL. Markdown twins are published for editorial content only. Institution data pages do not have them. For data at scale use the API, which is documented at https://www.bankregreports.com/api/ and specified at https://www.bankregreports.com/openapi.json. It returns typed JSON with explicit units and periods, and one call replaces hundreds of page fetches. ## Sitemap - [Glossary](https://www.bankregreports.com/glossary/): every metric, with formula and thresholds - [Blog](https://www.bankregreports.com/blog/): analysis and explainers - [API documentation](https://www.bankregreports.com/api/): the programmatic way to get this data - [XML sitemap](https://www.bankregreports.com/sitemap.xml): the complete crawlable index