The Credit Process 银行贷款程序.ppt

The Credit Process,Evaluate the quality of the credit process,Learning Objectives,Upon the completion of this module, you will be able to,Describe the basic elements of a quality credit process,Explain the importance of each component of the credit process,Explain the critical importance of the identification, measurement and evaluation of risk in the credit process,The borrowers current and expected financial condition The borrowers ability to withstand adverse condition or stress The borrowers credit history and a positive correlation between historical and projected repayment capacity The optimal loan structure, including loan amortization, covenants, reporting requirements for the underwriting elements,Credit Process,Collateral pledged by the borrower amount, quality and liquidity; bank ability to realize the collateral under the worst case scenario Qualitative factors, such as management, the industry and the state of the economy,Credit Process (cont.),Credit Initiation & Analysis Process,Screen prospective customers in order to identify highest quality prospects,Collect data for analysis of risks associated with prospective customers,Analyse risks associated with prospective customers,Using risk analysis as the basis, structure proposed credit facilities to maximize profit and minimize potential losses.,Prepare well documented credit analysis package,Analysis of risks associated with any borrower should focus on the four foundations of creditworthiness: Industry: involves the industry dynamics and the companys position within the industry. Weakness in the industry itself can significantly impact loan repayment ability and the companys position within the industry is an important issue.,Analysis of risks,Financial condition: focuses on the borrowers ability to generate sufficient cash, the first source of loan repayment, or to draw on existing resources, e.g., capital or assets, to repay bank borrowings. The credit analyst examines the income statement, the balance sheet and the cash flow statement to evaluate this foundation of creditworthiness, focusing on profitability, efficiency, liquidity, and leverages in particular.,Analysis of risks (cont.),Management Quality: entails the competence, integrity and alliances of the key individuals running the company. Management weakness or dishonesty can have an impact on both repayment capacity and security realization. Depth of management is always a concern, especially in smaller, family-run organizations.,Analysis of risks (cont.),Security Realization: determines the level of the banks control over collateral and the likely liquidation value, factoring in time, i.e., net present value. Weakness in security realization threatens the second source of loan repayment.,Analysis of risks (cont.),Credit underwriting is the process that banks undertake to structure a credit facility to minimize risks and generate the best return, given the risks that the banks assume. The credit structure includes the term of the loan, collateral, amortization, timing of interest payment and reporting.,Credit Underwriting,Income Rental payment history Balance sheets, profit and loss Verification of significant non-mortgage debt. Mortgage payment history Account balances last update within 90 days Employment,Credit Underwriting (cont.),Expense Business tax Child support, utilities or alimony supports Office rental Gasoline Others,Credit Underwriting (cont.),After the loan is approved and draw down allowed, the loan should be continuously watched over. These include keeping track of borrowers compliance with credit terms, identifying early signs of irregularity, conducting periodic valuation of collateral and monitoring timely repayments.,Credit Monitoring,Credit workout should be covered in detail in the banks credit policy. Dealing with borrowers whose capacity to repay is in doubt or has become impaired is the subject Problem loans develop with credit weaknesses or negligence The successful loan workout depends on early identification of credit weaknesses and adverse credit trends.,Credit Workout (Problem Loans),Explore the characteristics of a successful workout program, and the five stages of problem loan resolution. Determine and evaluate the causes of problem loans Understand how to review resources, develop a solution, and implement a workout program Learn the unique elements and options of real estate workouts Identify other collection devices such as judgment, levy, garnishment, and prejudgment remedies Understand the types of bankruptcy and hierarchy of claims,Credit Workout (Problem Loans) (cont.),Policy, standard and procedure Customer risk profile Routine execution Independent of verification and approval Weak points or gaps,Evaluation of the credit process,Avoidance of over-indebtedness Transparent and responsible pricing Appropriate collections practices Ethical staff behaviour Mechanisms for redress of grievances Privacy of client data,THE CLIENT PROTECTION PRINCIPLES,This module contained a description of the main components of the credit risk evaluation process Describe the basis elements of a quality credit risk evaluation process Explain the import