Credit Risk Analysis

Banking

To be successful in the highly regulated lending environment, we need to understand the customer’s needs and to properly evaluate their repayment capacity.

The program starts with determining whether a request is reasonable and within policy, and how to approach the customer’s need and try to fit in the appropriate type of financing scheme.

Participants then learn how to conduct a financial history review, verify and evaluate income and expenses, and use key indicators of debt servicing ability to help identify a suitable loan for the borrower.

Participants will learn to make acceptable decisions and to develop alternative offers to the customers whose requests are declined.

Then they examine loan documentation and disburse loans with verification of end use.

The course concludes with an overview of the monitoring loans and recovery techniques.

Course Objectives

Participants will be able to:

Understand the nature of SME lending and the risks in lending to SMEs.
Understand the structure of financial statements.
Classify the components of financial statements for a meaningful ratio analysis.
Read the financials of the borrowers and understand the financial performance and position.
Understand the economic characteristics of the industry in which the firm operates.
Understand the strategies the firm pursues to differentiate itself from its competitors.
Select the best type of consumer credit to meet consumer needs.
Identify potential risks to repayment.
Evaluate the risk of the proposal and suggest mitigation of risks.
Properly document various types of loans
Monitor and learn recovery techniques.
Develop the fundamental skills necessary to evaluate retail credit requests

Schedule – DAY 1

Industry analysis

Brief overview of Industry Analysis
Company analysis- their profile- history- areas of operation- availability of resources – Management team- Capacity- Competitors- business strategy
The scope of financial statement analysis.
The sources of information used in financial statement analysis
- statement of financial position or balance sheet,
- statement of comprehensive income,
- statement of changes in equity, and
- cash flow statement.
The difference between a balance sheet and an income statement
The components of balance sheet and income statement
Classification of various components of financial statements for ratio analysis.
The importance of auditor’s reports and various types of auditor’s reports.
The importance of notes to financial statements
The importance of directors’/management reports

Exercises

1. Entry level test
2. Class exercise on company analysis
3. Homework exercise on company analysis
4. Class exercise on classification of components of financial statements.
5. Class exercise on notes to financial statements
6. Homework exercise on auditor’s and management report.
7. Homework exercise on notes/schedules to financial statements

Schedule – DAY 2

Introduction to financial statement analysis
Horizontal Analysis
Vertical Analysis
Introduction to Ratio analysis
Financial liquidity analysis
Solvency analysis

Exercises

1. Class exercise on horizontal analysis.
2. Class exercise on vertical analysis.
3. Class exercise on liquidity and solvency ratios.
4. Homework exercise on horizontal analysis.
5. Homework exercise on vertical analysis.
6. Homework exercise on Liquidity and Solvency ratios

Schedule – DAY 3

Profitability analysis
Activity analysis
Understanding the performance and position of the firm using cross verification of ratios.
Commenting on the overall performance and position of the firm.
Evaluating Credit Risk
Mitigating credit risk
Computation of Expected Loss as per Basel guidelines

Exercises

1. Class exercise on Profitability and Activity ratios.
2. Class exercise on establishing interrelationship between ratios.
3. Class exercise on commenting the overall performance and position of the firm.
4. Homework exercise on all financial ratios.
5. Homework exercise on finding the interrelationship behaviour of ratios.
6. Homework exercise on commenting the overall performance and position of the firm.

Schedule – DAY 4

Understanding and use of pursuing other documents
- VAT returns
- Income-tax returns
- Orders in hand
Introduction to trend analysis
Importance of trend analysis
Trend analysis
Measuring financial performance
Internal comparison over periods
Comparison with benchmarks.
Projecting future performance
Limitations of Ratio and Trend analysis
Importance of site visit and inspection
Monitoring and recovery
Importance of monitoring

Exercises

Two Class exercises on doing trend analysis and commenting upon the analysis.
Two homework exercises on doing trend analysis and commenting upon the analysis

Regular Fee:

USD 980

Per Participant
(Exclusive of VAT)

Group Registration Benefit

Planning to attend with colleagues? Organizations registering 3 or more participants receive a 15% group discount, making it more economical to develop teams together while creating a shared learning experience.

The Program Fee Includes:

Full-day instructor-led training
Comprehensive course materials
Practical tools, templates and learning resources used during the program
Interactive exercises and facilitated discussions
Networking opportunities with professionals from other organizations
Lunch and refreshments
SIMFOTIX Certificate of Completion

Registering a Team?

For larger groups, we can also explore a customized in-house delivery exclusively for your organization. The program can be tailored to your business context, participant profile, and specific learning objectives.