商业银行管理英文课件：第16章 Lending Policies and Procedures Managing Credit Risk

1、Chapter 16 Lending Policies and Procedures: Managing Credit Risk16.1 Types of Loans Banks Make房地产 Real Estate Loans金融机构 Financial Institution Loans农业 Agriculture Loans商业企业 Commercial and Industrial Loans个人 Loans to Individuals融资租赁 Lease Financing ReceivablesLoan type and policy Loan Type： 1.Accordin

2、g to the loan repayment periodShort-term loans (below 1 year, including 1 year) Medium term loan (1-5 years, including 5 years) Long-term loans (5 years) 2.According to loan guarantee conditions （1）loan on credit （2）guaranteed loanRefer to loan have a certain property or credit loan repayment as gua

3、rantee.Mortgage: Loans with the borrower or a third persons property as mortgage. Hypothecated loan：Loans With a borrower or a third persons personal property or rights as the pledged property. （3）notes discounted common types of mortgageReceivables 应收账款Factoring 保理 Bank purchase the borrowers accou

4、nts receivable according to a certain percentage of the book value.Inventory 存货 Car dealers 汽车交易商Real estate 房地产Personal property 个人财产Personal guarantee 个人担保Major shareholders or company owners stock, deposit or private property 大股东或公司所有者的股票、存款或私人财产3.According to Loan repayment methodBullet repaymen

5、t and amortization 一次性偿还和分期偿还4.According to the quality of the loan (risk) （1）Normal loans: Borrowers can perform loan contract, has fully grasp repay the principal and interest timely. （2）Attention loans：Loan principal and interest is still normal, but there have been some unfavorable factors may a

6、ffect the loan repayment. (should pay attention and monitor)（3）Subprime loans：Borrowers have been unable to repay the loan principal and interest on the normal operating income, and have to repay the loans through refinancing or robbing Peter to pay Paul (拆东墙补西墙).（4）Suspicious loan：Borrower will be

7、unable to repay the loan principal and interest fully, certainly to cause a part of the loss. （5）Loss loan：After all possible measures and all the necessary legal procedures, the principal and interest is still unable to be recovered, or only take few back . 5.According to Loan purpose Loan TypeClas

8、sified according toContentExpiresDemand loan, Fixed loan, OverdraftGuaranteeLoan on credit, Guaranteed loanPurposeCommercial and industrial loans, Agricultural loan, Consumption loanRepaymentOnce paid loan , Amortization loanRiskNormal, Attention, Subprime, Suspicious, Lossesloan policy: The sum of

9、all the policies, measures and procedures commercial banks make to guide and standardize the loan business, manage and control the loan risk. 1.Loan work procedures and purview division（1）Marketing, investigation and credit analysis before the credit.（2）Assessment, review and lending after banks acc

10、ept the loan application.（3）Supervision and inspection, risk monitoring and loan principal and interest recover after issuing.2.the related system：（1）The loan approval system Our country shall practise a system of “separation” of approving and borrowing. (“审贷分离”制度) Loan investigators responsible for

11、 the investigation error and evaluation of misalignment before the credit. Loan censors responsible for the review of loan risk, responsible for audit failure. Loan inspectors is responsible for check and collect errors after loans issuing.（2）Hierarchical approval system (分级审批制度) Stipulate the loan

12、approval varieties and the highest limit of credit departments at all levels and relevant personnel.3. factors should be considered when making loan policy （1）Laws and regulations （2）fiscal & monetary policy （3）Bank capital condition （4）Bank liabilities structure （5）The economic environment in regio

13、n （6）The quality of credit personnel1. Loan application2.Credit investigation3.Evaluate the borrowers credit4.Loan Approval5.The signing of loan contracts and guarantees6.Loan origination7.Loan review8.Loan collection16.2 Steps in the Lending ProcessSome key problems in loan program and operationBef

14、ore the creditpre-loan investigation.The client applies for loan borrowingLoan applicationLoan feasibility investigation(2) credit analyst.purposeindustrymanagement levelcredit assessmentdata information(3) Loan negotiations.Payment conditionsContractGuarantee conditionsWhen the loan(4) Loan Approva

15、lHead of credit personnelhigh-level managerial personnelHierarchical approval system(5) draft fileLegal contractLoan documents reviewInspection of collateralAutomatic waiver clause(6) loan originationProof of effectiveperform Loan documentsSome key problems in loan program and operationAfter the loa

16、n(7) daily management.Data informationCollateralcredit vettingloan review(8) emergency measures.early warning signsadjust strategiesmanagement planLoan restructuringTry to collectbring to court(9) loan repayment.All the principal repaid and interest receivedThe Six Basic Cs of Lending Character Spec

17、ific Purpose of Loan and Serious Intent to Repay Loan Capacity Legal Authority to Sign Binding Contract Cash Ability to Generate Enough Cash to Repay Loan Collateral Adequate Assets to Support the Loan Conditions Economic Conditions Faced By Borrower Control Does Loan Meet Written Loan Policy and Ho

18、w Would Loan Be Affected By Changing Laws and Regulations16-1616.3 loan pricing and methods1.Loan pricing principlesprofit maximization, extending market shares , ensure the safety of the loan, maintain bank image2. The loan price structureloan rate, loan commitment fee, compensating balance, implic

19、it priceNote: the actual lending ratesloan rate/（1Compensation balance rate 补偿余额率）Methods Used to Price Business LoansCost-Plus Loan Pricing MethodPrice Leadership ModelBelow Prime Market Pricing Customer Profitability Analysis17-18Loan commitment fee 贷款承诺费： Refers to the fees charges from the funds

20、 that bank has promised to lend to customers, and the customer didnt use.Compensating balance 补偿余额： Is required by the bank, the borrower should keep a certain quantity of demand deposits and low interest rates fixed deposit in the bank . Generally as a condition of the bank agreed to loan and write

21、 into the loan agreement.Implicit price 隐含价格： Refers to the content of some non-monetary in loan pricing. The purpose is to ensure that customers can repay the loan, usually reflected in additional clause in loan agreement.3. Factors that affect the price1）cost of funds2）Loan risk 3）Bank Charges4）Th

22、e loan supply and demand5）The relationship between the borrower and the bank6）The borrowers credit7）Target rate for the loanPricing methodTheoretical formulaTarget yield（loan proceeds- loan fees）/equity capital should amortize（应摊产权资本）；loan proceeds=interest income + management feeBase rateBase rate+

23、 x%Cost plus Loans cost rate + interest rate addition（利率加成）Preferential addend Preferential interest rate+ x%Preferential multiplierPreferential interest rate * factorCompensating balanceAccording to the compensation balance decided to loan interest rates4. Loan pricing method1） Cost-Plus Loan Prici

24、ng Method loan rate = Loans cost rate rate plusBorrowing costs include the cost of capital, loan service costs and operating costs, interest rate plus means the banks reasonable profit . 2） Price Leadership Model17-23a. Determine the risk premiumThe level of loan risk and premium Experts Copeland su

25、ggests.Level of riskRisk-freeSmall riskStandard risksSpecial attentionBelow standardSuspiciousRisk premium0%0.250.501.52.55b. Prime rate addend method (优惠利率加数法) Prime rate multiplier method (优惠利率乘数法)After interest rate liberalization, prime rate pricing method produce the two formulas: Prime rate ad

26、dend method ：Based on the prime rate plus a number of points to form a loan interest rates.Prime rate multiplier method ： Based on the prime rate Multiplied by a coefficient to form a loan interest rates.prime rate pricing methodLevel of prime rateprime addend prime multiplierrisk gradeA1%risk grade

27、B2%risk grade A 1.1risk grade B 1.26%8%10%7%9%11%8%10%12%6.6%8.8%11%7.2%9.6%12%3） Below-Prime Market Pricingthe Pre-tax yield The bank gain From the whole customer relationship The income from providing the customer loans and other service.Net loan fund the customer actual use.The cost ofproviding t

28、he customer loans and other service.Cost-benefit pricing(成本收益定价)Calculate the net rate of return of disposable fundsCapital marginal cost rate(资金边际成本率)Profit target rate(利润目标率)（Loan income Loan expense）/net funds used（The amount of money that the borrower actual use）Loan pricing, to determine the co

29、st of capital and profit target rates first , and then calculate loan income, then determine the price of the loan.CaseIn bank, the marginal cost of capital is 6%，the target profit margin is 2%，bank charges is 20000 yuan ，and the bank issue 1 million yuan in loans to a customer, the amount customer

30、actually use is 1 million yuan. The bank loan income as follows:（6%2%）（Loan income20000 yuan ）/ 1 million yuan Loan income 100000 yuan The loan interest rate100000 yuan /1 million yuan 10%If consider compensation balance, Assume that in the case Bank requires customers to store 20% of the loan amoun

31、t as the compensation balance in the bank，and charge 1% commitment fee to the compensation balance. The customer actual use amount is 800000 yuan, the banks loan income (Y),（6%2%）（Y2）/80,Y=84000 yuan Loan interest income8.4100 20% 1% 82000 yuan The nominal interest rate loans8.2 / 100 8.2%4）Customer

32、 Profitability Analysis (CPA)The price of consumer credit depends on the size and terms of the loan. To achieve balance, its price should meet the type: interest income = cost of funds +Loan defaults loss+Other Cost Amortization of loans, to ensure the balance of payments, the price should meet the

33、type ： ( r d l ) S*B (M / 12) = Ca + CcMd=Loan capital cost rate 贷款资金成本率l=The average non-performing loan rate 平均贷款呆帐率S=loan amounts 贷款额B=the average uncollected loan ratio 平均未收回贷款比率M=times repay the loan by the month 按月偿还贷款次数Ca=attraction and distribution costs 贷款招揽和发放成本Cc=The recovery cost of the

34、loan by the month 每月贷款收回的成本that is：Net interest income for the loan = All loans management costCASEloan costs ： Ca=155$ Cc=9.65$ d=5.12% l=0.60%The loan interest rate to ensure the balance of payments?Assumption：S=3000, deadline for 2 years, pay by the month, M=24, B=55%. The loan interest rate shou

35、ld be：（r-5.12%-0.6%） 3000 55% （24/12）=155+9.6524 r =17.44%lending amount to ensure the balance of payments （Deadline for 2 years）Assumption ：r=12%，M=24，B=55%Minimum should be：（12%-5.12%-0.6%)S 55% (24/12)=155+9.65 24 S=5596 This shows that when other conditions unchanged, If the loan amount is 3000,

36、 the loan interest rates Must be at least17.44%. And If the loan amount is 5596，12% can realize the balance of payments. Consumer loan rates largely affected by the loan , the industrial and commercial lending rates would not be so dramatically affected by the loan amount. 16.4 The main loan business1. loan on credit (信用贷款)1）Credit loan object.Excellent credit standing, strategic target, big companies2）The characteristics of the credit.Procedure is simple, high risk, and high interest rate, fu