Analysis of the loan portfolio of the bank. The loan portfolio is ...

Among the most significant indicators of the performance of a commercial bank is the loan portfolio. It can have a rather complex structure and require a balanced approach to the interpretation of the indicators that are contained in it. But, despite this, banks regularly have to examine their loan portfolio. Successful solution of this task is the most important factor in the efficiency of the financial institution. What is the structure of the loan portfolio? How can we analyze the indicators contained in it?

Specificity of the loan portfolio

A loan portfolio is, if one of the concepts prevalent among Russian researchers is followed, the balance of the debt owed to the bank (or other entity of commercial activity) that arose as a result of the provision of loans to other organizations or individuals. Approaches to determining the value of the corresponding indicator can be very different.

Thus, some researchers believe that it is necessary to include interest in the loan portfolio in relation to the full repayment schedules, others prefer to include unambiguously only the principal debt, and other components of the loan - to calculate by special formulas. The argument - the loaned subject can pay off the debt ahead of schedule and not pay interest thereto.

Specifics of analysis of the loan portfolio of the bank

Analysis of the loan portfolio of the bank is extremely important in terms of assessing the stability of the relevant financial institution. The fact is that this type of commercial organizations form the bulk of the profits, usually as a result of the provision of loans. However, it is important not only how much credit the bank issued, but also how disciplined the borrowers will be calculated. Thus, one of the key criteria that determine the quality of the credit portfolio of a financial institution is the solvency of the persons to whom it provides loans. It can be determined on the basis of a variety of indicators.

If it is a question of legal persons, then it can be:

- financial turnover;

- level of the current credit load of the enterprise;

- the specifics of key contracts and other factors that ensure the stability of revenue;

- credit history.

Concerning borrowers in the status of individuals, their solvency can be determined on the basis of:

- from the size of the salary;

- from the stability of the company-employer;

- from the current level of crediting;

- from the content of the credit history.

As sources for carrying out the appropriate analysis, both internal corporate documents and those that reflect the interaction of the bank with specific borrowers can be used. First of all, these are loan agreements, applications (in which, as a rule, detailed information about the client is indicated).

A loan portfolio is an indicator that reflects loans by terms, amounts, and the level of profitability, determined on the basis of the terms of the contract with the borrower. Various economic risks can also be taken into account. The analysis of the bank's loan portfolio is used, firstly, to determine the maximum possible profit of a financial institution, which can arise upon the return of borrowers to capital, and secondly to identify possible factors that may prevent creditors from settling in full and on time in full Bank.

Portfolio Structure

How can specific indicators characterizing the considered stability parameter of banks be determined? How can the structure of the loan portfolio look like? Most often, loans are classified according to the following reasons:

- attribution to foreign exchange or ruble;

- method of providing;

- maturity;

- legal status of the borrower;

- country of origin of the person to be credited.

This list of criteria, of course, can be supplemented by other items.

What is not in the portfolio?

It is noteworthy that some types of loans are not included in the loan portfolio. When it's possible? In the methodology of many banking organizations, it is customary not to include in the list of assets loans that are issued to state authorities or extra-budgetary funds. This may be due to the issuance of such loans without significant requirements for collateral or at interest rates significantly different from the market ones. A loan portfolio is an indicator that reflects the typical activities of a financial institution. Loans at preferential rates may not meet this criterion.

Loans that are not included in the credit portfolio of a commercial bank may also be issued to partner structures, other financial organizations of the holding, if the current institution is part of its structure, or to subordinate legal entities. Actually, in many ways, such transactions are formal loans. In fact, these can be ordinary inter-corporate transfers, not most often directed at extracting profits from the bank.

Portfolio analysis stages

We will now study in more detail how an analysis of the credit portfolio of a financial institution can be carried out. Above, we noted the main principles that underlie the relevant research, namely, the correlation of the volume of current loans and the factors that affect the success of their repayment by the persons being loaned. Now our task is to consider the main stages within which the loan portfolio is analyzed. Modern researchers distinguish the following their totality:

- analysis of factors affecting the demand and supply of services of the bank;

- determining the credit potential of a financial institution;

- study of the structure of loans issued for possible compliance with the identified potential;

- study of current loan agreements signed by the bank and borrowers;

- assessment of the quality of the portfolio, development of recommendations for its improvement.

We will study the specified stages of the analysis of the corresponding indicator of the bank's performance in detail.

Factors of supply and demand for credit services

The factors in question can be classified on various grounds. As a rule, internal and external are distinguished. To the first it is customary to include:

- liquidity of the bank, available capital, which can be used to provide loans;

- the availability of resources to cover a possible liquidity deficit due to low payment discipline of customers;

- specificity of the segment of commercial activities of the bank, characteristics of the target client audience.

Among the external factors:

- economic processes taking place in the country, region or concrete settlement;

- level of competition in the market of bank lending;

- The policy of the Central Bank - for example, regarding the formation of the value of the key rate;

- Legislative regulation of credit relations.

The Bank, by analyzing these factors, can thereby determine those that are most significant in terms of the quality of the loan portfolio, and then use the data obtained to improve the characteristics of the relevant indicator.

Determination of credit capacity

The next stage of the portfolio analysis is the determination of the credit potential of the financial institution. The solution of this problem presupposes, first of all, the study of the sources, at the expense of which the bank can receive revenue in the aspect of the activities for the provision of loans. The credit potential in this case can be presented in two ways: as one that reflects the bank's short-term resources, as well as one that relates to "long" contracts with the clients of the financial institution. What is the specificity of each of them?

Short-term potential is formed on the basis of funds that the bank accumulates on deposits, settlement accounts, salary accounts and other resources, through which it is possible to quickly increase liquidity. As a rule - within a year. Long-term potential, in turn, presupposes that the banking institution has sources that can also be used as a tool to increase liquidity, but not immediately, and with the expiration of time, usually not earlier than a year after the conclusion of the relevant contracts with the client . The management of the bank's loan portfolio directly depends on the types of potential considered, which characterizes the financial institution. The parameter in question is among the most important from the standpoint of analyzing the stability of the bank as a commercial structure.

According to some researchers, as an element of credit capacity, the institution can access sources of external financing. First of all, this, of course, loans from the Central Bank. But they can also be actively supplemented by loans from foreign markets. Another question is whether a particular bank has access to such. It can be limited both by economic criteria - for example, because the current indicators of the institution, according to the creditor, do not meet the solvency criteria, and political - if the bank is sanctioned, due to which it can not apply to foreign borrowers.

Loan analysis for compliance with potential

The next stage of the study of the credit portfolio of a financial institution is the analysis of the compliance of loans granted to the identified potential value, which we mentioned above. What kind of tasks can the bank face in this case?

First of all, this is an assessment of the loan portfolio in terms of matching the maturity of contracts signed by the financial institution and borrowers, and the timeliness of access to resources, which form the potential noted above. There should not be a situation in which the bank issues a large number of "long" loans, but it does not have "short" resources to maintain liquidity. Even if the borrower will pay on schedule properly - the proceeds may not be enough to solve the current tasks of the institution.

In some cases, banks, fixing the shortage of long-term capacity and not having the resources to increase it, are forced to convert short-term resources into it. And this can also have a negative impact on the institution's liquidity indicators.

The implementation of the analysis of loans for compliance with the potential smoothly flows into the work that forms the next stage of the loan portfolio research - study of loan agreements concluded between the bank and the client. Let's consider it in more detail.

Study of contracts

Of course, it is unlikely that the bank's specialists will paginate the content of each agreement with the borrower. This is technically very difficult and completely impractical in terms of effort. As a rule, statistical analysis of data contained in contracts is carried out. The fact is that documents of the appropriate type contain very few differences. Most often they boil down:

- to the loan amount;

- to the difference between individually determined interest rates;

- the maturity of the loan ;

- to the type of loan security.

The scheme in question is applicable if, of course, it is an analysis of contracts concluded with the same category of borrowers - for example, citizens officially employed at the place of residence.

It turns out that it is not necessary to study each document: it is enough to classify sources according to groups that suggest unification by some common feature. For example, it may be contracts that include an interest rate of 20% per annum or higher, or those that assume repayment of a loan within a year. Thus, the bank, by examining the risks of the loan portfolio, can simply accumulate the relevant information contained in the contracts, and this will be their investigation.

Based on the results of the corresponding stage of analysis, the financial institution may have at its disposal statistics on which it will be possible to determine whether the development policy of a banking organization is sustainable:

- from the point of view of securing loans;

- in the aspect of correlation of conditions under loan agreements to the corresponding potential;

- in terms of revenue generated as a result of commercial activities.

Based on the results of the work, conclusions, portfolio quality assessments, and recommendations for its improvement are formulated in the next stage of the researchers' work.

Assessments and recommendations

The main task in this case is to intelligently interpret the results of the analysts' activities. The results of the work should be aimed at enabling them to be used as a practical tool for improving the bank's development strategy. They should become a factor in optimizing the activities that form the management of the credit portfolio of the financial institution.

Competent analysis of the relevant parameter of the bank's stability and its interpretation is the most important condition for the institution's competitiveness in the market. The loan portfolio of Sberbank or another giant of the Russian banking sector is likely to be a benchmark. But with a balanced approach to determining the development strategy, any financial institution can very well become a significant player in such a highly competitive market. A loan portfolio is not a set of figures for reporting. This is a real tool for improving the banking business model.

The credit portfolio of a financial institution can be evaluated not only by its internal structures, but also by external players - for example, investors. Of course, subject to availability of access to relevant indicators. In this part, the competitive advantages of banks that have a balanced loan portfolio will be expressed in the ability to receive large investments. Or - as an option - to have preferences when gaining access to external loans. At the same time, the potential partners of the financial institution in this part can also be authors of recommendations aimed at improving the bank's development strategy based on the results of the loan portfolio research.