Credit Risk Analysis

Traditionally, lenders have faced credit risk in the form of default by borrowers. To this date, credit risk remains major concern for lenders worldwide. The more they know about the creditworthiness of a potential borrower, the greater the chance they can maximize profits, increase market share, minimize risk, and reduce the financial provision that must be made for bad debt. This product provides fundamental understanding of the credit risk analysis process and discusses in detail, various aspects of financial statement analysis, including ratio and cash flow analysis, among others to help in making better credit-related decisions. It also looks at various non-financial factors such as Business Plan, Industry/Sector, Top Management, etc. that could affect the creditworthiness.

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Overview of Credit Risk Analysis
Gives an introduction to the concept of credit risk and analysis.

• Stages in credit risk
• Importance of credit analysis in credit risk
• Principles of credit analysis
• Seven Cs of credit analysis
• Steps in credit analysis process

Duration: 1 Hour

Lending Process
Gives an introduction to the lending process followed by banks.

• Various steps involved in loan appraisal
• Components of a bank’s lending policy
• Loan Documentation
• Loan Pricing and Profitability Analysis
• Regulations related to lending

Duration: 1.5 Hours

Financial Statement Analysis-1
Gives an introduction to the ratio analysis conducted by banks for verifying a companies strength.

• Various types of ratios including liquidity ratios, turnover ratios, profitability ratios,leverage ratios and market ratios
• Importance of these ratios
• Comparative analysis
• It also has a calculator for calculating various ratios from a Balance Sheet and P&L Account

Duration: 1.5 Hours

Financial Statement Analysis-2
Gives an introduction to cash flow analysis.

• Statement of Cash Flows
• Cash flow from operating, investing and financing activities
• Direct and indirect method of preparing statement of cash flows
• How to interpret cash flows for decision making

Duration: 1 Hour

Non-Financial Analysis
Explains the importance of non-financial analysis in credit analysis.

• Economy, Industry and Company (EIC) framework
• Models for non financial analysis
• Case studies for analysis

Duration: 1 Hour

Asset Classification and Loan Loss Provisioning

• Need for asset quality assessment
• Quantitative and Qualitative Review of asset quality
  Categories of asset classification
• Special mention assets
• Loan classification practices in various countries

Duration: 1 Hour

Borrowing Causes and Sources of Repayment

• Need for asset quality assessment
• Quantitative and Qualitative Review of asset quality
• Categories of asset classification
• Special mention assets
• Loan classification practices in various countries

Duration: 1 Hour

Problem Loans
Explains the impact of problem loans.

• Non-performing loans (NPLs)
• Methods of resolving NPLs
• How to prevent NPLs

Duration: 1.5 Hours

Consumer Installment Lending
Introduces the concept of Consumer Installment Lending, which is widely used by lenders.

• Types and characteristics of consumer installment lending
• Various types of Installment loans
• Dealer Agreement, Recourse and Dealer Reserve
• Common risks faced in consumer installment lending

Duration: 1 Hour

Floor Plan Lending
Introduces the concept of Floor plan lending which is a specialized revolving line of credit.

• Characteristics of Floor Plan Lending
• Methods of Floor Plan Lending
• Risks Associated with Floor Plan Lending

Duration: 1 Hour

Accounts Receivable and Inventory Lending
Introduces the concept of Accounts Receivable and Inventory Lending, which is a specialized area of commercial lending used by the lenders.

• Concept of Accounts Receivable and Inventory Based Lending
• Risks faced in Accounts Receivable and Inventory Based Lending

Duration: 1 Hour

Participation Loan
Introduces the concept of Participation Loan used at times of high risk.

• The Concept of Loan participation
• Need for Loan participation
• Process of Loan participation
• Risks faced in Loan participation

Duration: 1 Hour

Letter of Credit and Loan Commitments
Introduces the concept of Letter of Credit and Loan Commitments.

• Concept of Letter of Credit (LC)
• Types of Letter of Credit
• Risks faced in Letter of Credit
• Loan commitments, Unfunded lines of credit and their characteristics
• Potential credit risk in loan commitments and unfunded lines of credit

Duration: 1 Hour