Methods for analyzing the quality of a banks loan portfolio

Lending is one of the major banking institutions. But lending has some risks of varying degrees. The main purpose of banks is to repay loans and to maximize profits. To do this, banks need to implement an efficient, flexible and modern credit portfolio quality management system. An important element of this system is the analysis of the quality of the loan portfolio. That is why the consideration of the methods by which banks can carry out this analysis is a very actual topic. The purpose of this paper is to review methods of analyzing the quality of a bank's loan portfolio, as well as to outline the disadvantages and benefits of each method. The paper examines the most common and modern approaches to defining the concept of «bank loan portfolio». The types of loan portfolio are considered. The definition of the quality of the bank loan portfolio is given. The definition of bank credit portfolio management is given and the basic elements of credit portfolio management are given. The main methods to be used in assessing the quality of a bank's loan portfolio are identified. They are divided into three groups: methods of expert judgment, statistical and analytical methods. A more detailed description of the methods in the three groups listed above is given. The rating method, the «Decision Tree» method, coefficient analysis, Monte Carlo method, scoring, correlation-regression analysis, taxonomic analysis and stress testing are characterized. The advantages and disadvantages of each method are also given. Indicators to assess the quality of the bank's loan portfolio are considered: the credit portfolio risk indicators and the profitability of credit operations. After the study, it was concluded that the above methods of analysis of the quality of the loan portfolio should be applied comprehensively. It is determined that currently the banks of Ukraine do not use the whole analytical set of methods, but choose for themselves several and constantly use them in the analysis of the quality of the loan portfolio. In order to ensure effective management of the bank's credit portfolio, it is necessary to constantly monitor the quality of the bank's credit portfolio for early detection of credit risk and its prevention, as well as for detection of deterioration of profitability indicators.

Evaluating the Processes of Management of Credit Portfolio of JSC CB «PrivatBank»

The article is aimed at studying the status and structure of the credit portfolio of JSC CB «PrivatBank», also evaluating the processes of management of the bank’s credit portfolio through the computation of the coefficient of credit portfolio management efficiency. While analyzing financial indicators, a consideration and a research of the status of bank lending in modern conditions of the national economy of Ukraine were carried out. The reasons for reducing the proportion of the credit portfolio in the GDP structure during the research period are summarized. The fundamental principles of the credit portfolio management of JSC CB «PrivatBank» were analyzed in accordance with the «Regulation on credit policy». As a result of the research, the analysis of the main analytical indicators of credit portfolio management was accomplished, the structure of the credit portfolio and the structure of the bank’s portfolio credit quality during 2016-2019 were determined. On the basis of analytical data, the coefficient of efficiency of management of the bank’s credit portfolio was computed. Actual problems affecting the process of management of the bank’s credit portfolio were considered. The indicators of the efficiency of credit portfolio management of JSC CB «PrivatBank» for 2016-2019 are computed. It is determined that the key challenges for both the researched bank in particular and the banking sector in general remain a high proportion of non-performing loans. Decisive actions on the part of the management of JSC CB «PrivatBank» will help to improve the structure of the credit portfolio and reduce the amount of troubled debts of the bank. Ways to solve problems of improvement and enhancing the quality of credit activity of the bank are prospects for further research.

Managing Bad Debts in Commercial Banks of the Republic Of Uzbekistan

The problem of collectability of loans in commercial banks exists in the banking industry of many developing countries. In the Republic of Uzbekistan, since the early years of independence, commercial banks have been experiencing many issues concerning bad and/or doubtful debts. These types of loans appeared because of either poor and inaccurate collateral assessment or bad credit portfolio management. However the share of bad and doubtful debts in state owned banks is higher than private commercial banks. This paper studies the origin of the issue related to bad debts and answers why state owned banks have had an upward trend in the amount of those debts for the last 5 years. In addition, it develops the ways of addressing those issues.

Credit Portfolio Management in Nepalese Commercial Banks

Credit portfolio management is a key function for banks (and other financial institutions, including insurers and institutional investors) with large, multifaceted portfolios of credit, often including illiquid loans (Nario, Pfister, Poppensieker & Stegemann, 2016). After global financial crisis of 2007-2008, the credit portfolio management function has become most crucial functions of the bank and financial institutions. The Basel III, third installment of Basel accord was developed after crisis to strengthen bank capital requirements by increasing bank liquidity and decreasing bank leverage that encourages banks to measure credit risk of bank's portfolios. The Basel committee also raises an issue concerning the application of the risk weights used in the capital adequacy framework to determine exposure to risk assets for the purpose of determining large credit exposure (Morris, 2001).The portfolio management of the Nepalese banking sector has been improved remarkably during last 10 years due to the strict regulation of Nepal Rastra Bank. This journal will try to describe the present credit portfolio management practice of Nepalese commercial banks by using qualitative and quantitative methods. In this study, concentration of banks for credit portfolio management has been studied by analyzing security wise loan, product wise loan and sector wise concentration of loan where the researcher has found assorted outcomes. This research also aims to provide some suggestions to overcome with problems associated with credit portfolio.The Journal of Nepalese Business Studies Vol. X No. 1 December 2017, Page: 101-109