...evaluation methods in commercial banks and associated risks for managing assets and liabilities 97 Performance evaluation methods in commercial banks and associated risks for managing assets and liabilities University Reader PhD. Claudiu CICEA, Academy of Economic Studies Bucharest, Romania email : claudiu.cicea@man.ase.ro University Professor PhD. Daniela HINCU, Academy of Economic Studies Bucharest, Romania email : daniela.hincu@man.ase.ro Abstract Commercial banks represent the core of the credit for any national economy. In turn, the credit is the engine that put in motion the financial flows that determine growth and economic development of a nation. As a result, any efficiency in the activities of commercial banks has special implications on the entire economy. That is why we consider very useful to present an analysis of possibilities for evaluating the performance in the commercial banks. The management of every commercial bank must establish a system for assessing investment performance which suits its circumstances and needs and this evaluation must be done at consecutive intervals to ensure the achievement of the Bank's investment objectives of hand; and to know the general direction of the behavior of investment activity in the past and therefore predictable as it in the future on the other hand. The main objective for this paper is to analyze some quantitative methods used in assessing the performance of investment activity in commercial banks (such quantitative models...
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...≈√ Guidelines on Credit Risk Management C r e d i t A p p r ova l P r o c e s s and Credit Risk Management These guidelines were prepared by the Oesterreichische Nationalbank (OeNB) in cooperation with the Financial Market Authority (FMA) Published by: Oesterreichische Nationalbank (OeNB) Otto Wagner Platz 3, 1090 Vienna, Austria Austrian Financial Market Authority (FMA) Praterstrasse 23, 1020 Vienna, Austria Produced by: Oesterreichische Nationalbank Editor in chief: Gunther Thonabauer, Secretariat of the Governing Board and Public Relations (OeNB) ‹ Barbara Nosslinger, Staff Department for Executive Board Affairs and Public Relations (FMA) ‹ Editorial processing: Gabriela de Raaij, Heidi Koller, Markus Lietz, Wolfgang Spacil, Doris Wanka (all OeNB) Ursula Hauser-Rethaller, Karin Zartl (all FMA) Design: Peter Buchegger, Secretariat of the Governing Board and Public Relations (OeNB) Typesetting, printing, and production: OeNB Printing Office Published and produced at: Otto Wagner Platz 3, 1090 Vienna, Austria Inquiries: Oesterreichische Nationalbank Secretariat of the Governing Board and Public Relations Otto Wagner Platz 3, 1090 Vienna, Austria Postal address: PO Box 61, 1011 Vienna, Austria Phone: (+43-1) 40 420-6666 Fax: (+43-1) 404 20-6696 Orders: Oesterreichische Nationalbank Documentation Management and Communication Systems Otto Wagner Platz 3, 1090 Vienna, Austria Postal address: PO Box 61, 1011 Vienna, Austria Phone: (+43-1)...
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...AN ANALYSIS OF THE IMPACT OF RISK EXPOSURE TO THE PERFORMANCE OF BANKS IN NIGERIA CERTIFICATION I certify that this research work was carried out by MR ABOYARIN SALAMI TUNDE with Matriculation No.; 109025160 of the Department of Finance, Faculty of Business Administration, University of Lagos, Akoka, Lagos. __________________________ ______________ DR. LEKAN OBADEMI DATE _______________________ ____________ PROF. W. IYIEGBUNIWE DATE HOD DEPARTMENT OF FINANCE _______________________ ____________ EXTERNAL EXAMINER DATE DEDICATION This project work is dedicated to the Glory of ALMIGHTY ALLAH (SWT) to Him I say as always; ALHAMDULILAHI ROBIL ALAMIN!!! Special dedication also goes to the memory of my late father; Alhaji R.S.A Aboyarin. I pray his soul finds forgiveness and mercy before Allah (Amin. ACKNOWLEDGEMENT CHAPTER ONE 1.0: INTRODUCTION AND BACKGROUND TO THE STUDY Banks are germane to economic development through the financial services they provide. Their intermediation role can be said to be a catalyst for economic growth and development. The efficient and effective performance of the banking industry over time is an index of financial stability in any nation. The extent to which a bank extends credit to the public for productive activities accelerates the pace of a nation’s economic growth and its long-term sustainability. Amongst the...
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...credit risk management on financial performance, and introduces an overview of BancABC and its credit risk management practices 2.2Brief Company overview ABC Holdings Limited is the parent company of a number of banks operating under the BancABC brand in Sub-Saharan Africa, with operations in Botswana, Mozambique, Tanzania, Zambia and Zimbabwe. A group services office is located in South Africa.Historically, BancABC was a merchant bank offering a diverse range of services including wealth management, corporate banking, treasury services, leasing, asset management, and stock broking.ABC Holdings had Its primary listing on the Botswana Stock Exchange, and a secondary listing on the Zimbabwe Stock Exchange (BancABC annual report 2009) During 2014, the ABC Holdings Group was acquired by Atlas Mara. As at 31 December 2014, Atlas Mara had a 98.7% equity stake in ABC Holdings, held directly (60.8%) and indirectly (37.9%). Subsequent to the takeover, ABC Holdings was delisted from the Botswana Stock Exchange on 30 January 2015, and from Zimbabwe Stock Exchange on 12 February 2015.Atlas Mara is a British Virgin Islands registered company with a standard listing on the London Stock Exchange(BancAbc Annual report 2014) The seeks to review the credit risk management methods implemented by the bank . Definition of terms 2.3.1Credit According to Onyeagocha (2001), the term credit is used specifically to refer to the faith placed by a creditor in a debtor by extending a loan usually...
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...market 3. The capital markets are more likely to be characterized by actual physical locations such as the New York Stock Exchange or the American Stock Exchange. Money market transactions are more likely to occur via telephone, wire transfers, and computer trading. 4. According to Figure 1-3, the money market instrument that has had the largest growth is the Federal funds and repurchase agreements which grew from 18.1% of the total value of money market securities outstanding in 1990 to 25.6% in 2010. 5. The major instruments traded in capital markets are corporate stocks, securitized mortgages, corporate bonds, Treasury notes and bonds, state and local government bonds, U.S. government owned and sponsored agencies, and bank and consumer loans. 6. According to Figure 1-4, the capital market instrument that has had the largest growth is the corporate stocks which grew from 23.6% of the total value of money market securities outstanding in 1990 to 43.4% in 2000 and was still at 31/3% in 2010. One reason for the sharp increase in the amount of equities outstanding is the bull market in stock prices in the 1990s. Stock values fell in the early 2000s as the U.S. economy experienced a downturn—partly because of 9-11 and partly because interest rates began to rise―eate forums for parties to and stock prices fell. Stock prices in most sectors subsequently recovered and, by 2007, even surpassed their 1999 levels. Stock prices fell precipitously in during the financial crisis...
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...A-LPM Comptroller of the Currency Administrator of National Banks Loan Portfolio Management Comptroller’s Handbook April 1998 A Assets Loan Portfolio Management Table of Contents 1 1 3 11 13 13 14 15 15 17 19 20 22 22 22 24 24 25 26 27 27 28 29 30 32 33 34 36 36 37 37 38 38 Introduction Overview Risks Associated with Lending Credit Culture and Risk Profile Loan Portfolio Objectives Strategic Planning for the Loan Portfolio Financial Goals Risk Tolerance Portfolio Risk and Reward The Loan Policy Loan Policy Topics Loan Approval Process Portfolio Management Oversight Risk Identification Exceptions to Policy, Procedures, and Underwriting Guidelines Documentation Exceptions Policy and Underwriting Exceptions Aggregate Exception Tracking and Reporting Portfolio Segmentation and Risk Diversification Identifying Concentrations of Risk Evaluating and Managing Concentrations of Risk Concentration Management Techniques Stress Testing Allowance for Loan and Lease Losses Credit Management Information Systems Collections and Work-out Lending Control Functions Independence Credit Policy Administration Loan Review Audit Administrative and Documentation Controls Comptroller’s Handbook i Loan Portfolio Management Communication with Senior Management and the Board Loan Portfolio Management Supervision Asset Quality Reviews Targeted Reviews Process Reviews Administrative and Documentation Reviews Compliance Reviews Follow-up Evaluations on Management Commitments...
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...Credit risk Credit risk is a fast changing discipline at the leading edge of risk management practice. The recent credit crisis brought into focus the need for effective risk management control and highlighted many of the deficiencies of the banks’ approach to measuring credit risk. This has resulted in many financial institutions reviewing their existing approach to the management of credit risk from a process, organisational and systems perspective. At the same time, many institutions are also continuing to develop more sophisticated methods of risk management, such as measuring and hedging Credit Valuation Adjustments (CVA) and modelling economic capital and incremental risk Definitions of Credit risk: ❖ Credit risk is the risk of loss due to a debtor's non-payment of a loan or other line of credit (either the principal or interest (coupon) or both). ❖ Is the risk that another party to an investment transaction will not fulfill its obligations. Credit risk can be associated with the issuer of ❖ The likelihood that an individual will pay his or her credit obligations as agreed. Borrowers who are more likely to pay as agreed pose less risk to creditors and lenders. ❖ Risk of loss that may arise on outstanding contracts should a counter party default on its obligations. ❖ The risk that a counter party to a transaction will fail to perform according to the terms and conditions of the contract, thus causing the holder of the claim to suffer a loss. ...
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...stock to investors the most important being that the entire banking industry has been making a strong return to its pre-recession levels. Banks balance sheets are healthier than they have ever been due to recession as well, which in turn can return investors who may have shied away since the recession. Another major factor when investing in Wells Fargo is the fact that the dividends the company is paying as of March, 1 of 2015, are at 35 cents per share. That is a dramatic 700% gain since the company hit all-time lows of 5 cents during 2011. In stark comparison two of the other “big four” American banks, Bank Of America and Citigroup have yet to show any real improvement over the same time frame with 5 cent and 1 cent dividend payouts respectively. Wells Fargo has the largest market cap of all American banks, and is listed as number 29 in the fortune 100 as well with over 1.5 trillion dollars in assets (Borzyowski, 2014). As stated earlier the entire banking industry is making headway, but there is a difference in the entire Wells Fargo business model. For starters the company has built its capital off of providing community banking, as opposed to focusing more on investment banking and trading. Which provides more security in the form of diversity, especially if the markets do start to take a dive and people shy from investing, but there will always be people taking loans and mortgages in their communities. Perhaps just as important as that is the fact that Wells Fargo is extremely...
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...Orrstown Bank vs. DNB Financial Corporation Orrstown Bank Financial Statement Analysis In this assignment, we focus on Orrstown Financial Services vs. DNB Financial Corporations. Both institutions have similar financials and sizes of entities. The first part of the assignment is about, studying both institutions and compare them to each other. After that there will be an analysis and general study about the health of ORRF as an overall entity. All data are taken from UBPR reports, 10 k reports, Bloomberg, Yahoo, and Banks main website Common Size Net Income Statement This section of the analysis is about computing common size income statement for both ORRF and DNBFC. It seems that ORRF net income have decreased in value and resulted in huge loss in 2012 as (-63%) of net revenue. This dramatic change of the net income value started in 2011 due to the real estate low prices that have been an issue since the financial crisis started. This conclusion is supported by looking at the provision of loan losses that increased in 2011, showing the cause of the huge net loss. On the other side, DNBFC provision for loan losses have increased reasonably in 2008 to become (10%). In addition, the net income increased steadily after 2008 too. It appears, so far, from the Net Income Statement that DNBFC is doing much better than ORRF. Common Size Balance Sheet Statement Based on the common size balance sheet statement of ORRF, we can see that the total loans used to be very high before...
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...cannot make a student perfect in handling the real situation, it is an opportunity for the students to know the real life situation through this program. The report on “Performance Analysis of Grameen Bank (GB), BRAC and ASA as MFI.” is prepared by Md. Jasim Uddin under the supervision and guidance of Muhammad Mujibul Kabir, Professor, Department of Finance, University of Dhaka and shubashish Barua, researcher, InM to meet the requirement of the internship program of BBA. 1.2 Objective of the Report Broad Objective: Broad objective of this report is to meet the partial requirements for the fulfillment of BBA program. Specific Objectives: Internship program aims at providing knowledge about the real world business situation. The objectives of the report are- ➢ To be informed with the top three MFIs of Bangladesh focusing on poverty alleviation. ➢ To get an overview of services rendered by different MFIs. ➢ To identify the critical success factors (CSF) of Microfinance institutions. ➢ To compare the relative performance analysis of top three MFI: Grameen Bank (GB), BRAC and ASA ➢ To identify the problems faced by the MFIs. ➢ To suggest what components should be incorporated with the Microfinance program that will reduce the risk of being vulnerable to poor. 1.3 Limitation of the Study In preparing the report, the main limitations that I faced were- • Regulation from the firm on information as the firm is a private research...
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...about, studying both institutions and compare them to each other. After that there will be an analysis and general study about the health of ORRF as an overall entity. All data are taken from UBPR reports, 10 k reports, Bloomberg, Yahoo, and Banks main website. Common Size Net Income Statement This section of the analysis is about computing common size income statement for both ORRF and DNBFC. It seems that ORRF net income have decreased in value and resulted in huge loss in 2012 as (63%) of net revenue. This dramatic change of the net income value started in 2011 due to the real estate low prices that have been an issue since the financial crisis started. This conclusion is supported by looking at the provision of loan losses that increased in 2011, showing the cause of the huge net loss. On the other side, DNBFC provision for loan losses have increased reasonably in 2008 to become (10%). In addition, the net income increased steadily after 2008 too. It appears, so far, from the Net Income Statement that DNBFC is doing much better than ORRF. Common Size Balance Sheet Statement Based on the common size balance sheet statement of ORRF, we can see that the total loans used to be very high before the financial crisis. After 2009, loans decreased while short-term investments increased which is an indicator that ORRF started looking into safer short-term investments. When we looked at the retained earnings, we realized small amount in 2006, but in 2012 it became (-3%). The...
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...Master Thesis Entrepreneurship and Microfinance: A Framework for Impact Evaluation Abstract The idea and implementation of Microfinance has become a hot topic and is currently at the central stage in debates on poverty alleviation. Microfinance can be defined as the sustainable delivery of financial services to the poor that aims at creating a world in which as many poor households as possible, have access to a suitable range of financial services (Christen, Rosenberg and Jayadeva, 2004). However, the large majority of impact studies of microfinance lack empirical support and several limitations and obstacles continue to haunt the potential outcomes of microfinance, such as selection bias (Tedeschi, 2007) and lack of integration with the commercial banking sector (Copestake, 2007). In my thesis, I will focus on yet another limitation, that of lack of entrepreneurial knowledge amongst lenders in microcredit. I will develop on the marginal impact of entrepreneurial training on microcredit and suggest an empirical framework. The paper will start by presenting the topics of entrepreneurship and microfinance and the current situation in Tanzania. In Part II a review of an important study by Karlan and Valdivia will be discussed and in the following section a suggestion for a framework for an empirical study will be made. Conclusions and limitations will be presented in the final sections. Student: Eva Teekens ID: 5704871 Study: Master Business Studies Specialization: Entrepreneurship ...
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...risk management In this section a summarized position of various risks facing DBBL while conducting its business and operations and steps taken by the Bank to effectively manage and mitigate such risks are discussed. RISK MANAGEMENT FRAMEWORK Risk is defined by DBBL as risk of potential losses or foregone profits that can be triggered by internal and external factors. Therefore, the objectives of risk management are identification of potential risks in our operations and transactions, in our assets, liabilities, income, cost and off-balance sheet exposures and independent measurement and assessment of such risks and taking timely and adequate measures to manage and mitigate such risks within a risk-return framework. In DBBL, only calculated risks are taken while conducting banking business to strike a balance between risk and return. Risk is clearly identified, mitigated or minimized and if possible eliminated to protect capital and to maximize value for shareholders. It is also ensured that on-balance sheet and off-balance sheet risks taken by the Bank are consistent with risk appetite and short term as well as long term strategic objectives of the Bank. A wide range of tools and techniques are used to address & mitigate all kinds of inherent and potential risks in banking operations. The Bank attaches highest priority to establish, maintain and upgrade risk management infrastructure, systems and procedures. In this regard, sufficient...
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...Internship Report On Credit Risk Management: A Study On Sonali Bank Ltd. Supervised By: Shahidul Islam Lecturer Department of Marketing Comilla University Prepared By: Mahmudul Hasan ID – 0807031 Session- 2008-2009 3rd Batch Date: 20th January,2014 Department of Marketing Comilla University Table of Contents Contents Page no. Letter of Transmittal Letter of Authorization Acknowledge Executive Summery Chapter- 01 Introduction Background of the study Problem Statement Objective of the Study Chapter- 02 Literature Review Overview of Sonali Bank Ltd Overview of Credit Risk Management Literature Review: A Theoretical Framework Chapter- 03 Methodology Sources of Data Chapter- 04 Data Analysis & Findings Diagrammatic Analysis SWOT Analysis Findings Conclusions & Recommendations Internship Experiences References Letter of Transmittal 20th January, 2014 Shahidul Islam Lecturer Department of Marketing University of Comilla Sub: Submission of Internship Report entitled “Credit Risk Management : A Study On Sonali Bank Limited. Dear Sir, I am pleased to submit this internship report as you entitled me. I tried my best to present this internship report on Credit Risk Management: A Case Study On Sonali Bank Limited, Agrabad Corporate Branch, Chittagong, according to your...
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...1. Introduction 3 2.Company Profile- Brief Overview 3 2.1 Consumer banking: 6 3. Liquidity Risk: 7 3.1 Measuring Liquidity Risk –SCB 7 3.2 Measuring Credit Risk Exposure 10 3.3 Market Rate Risk 11 3.4 Value at Risk (VaR) 12 4. CAMEL RATING SYSTEM 13 1. Executive Summary International Banking can be defined as banking transactions crossing national boundaries. The activities involves like international lending; claims of domestic bank offices on foreign residents, claims of foreign bank offices on local residents, claims of domestic bank offices on domestic residents in foreign currency are the major activities involved in International Banking. The evolution of banking history dates back to 2000 BC in Assyria and Babylonia; while the modern banking systems originated in Renaissance Italy. The major incentive for the growth of international banking was migration of domestic customers who were MNE’s growing foreign activities and the impacts of regulatory differences. The report is comprised of Liquidity risks, market risks, credit risks of Standard Chartered Bank Plc. The company also demonstrates the firm efficiency of the firm using CAMEL RATING SCALE. The overview of the analysis states that the firm is operating proficiently under the guidelines of BASEL. Introduction According to Lewis & Davis (1987, p. 219), international banking is a denotation of cross-border and cross currency facets of banking business. They classify international banking into...
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