Duration: 3 days – 21 hrs
Overview
In today’s dynamic financial environment, effectively managing credit risk is essential for safeguarding profitability and maintaining healthy loan portfolios. This course provides participants with the knowledge and practical skills necessary to assess creditworthiness, manage credit portfolios, and apply risk-based pricing strategies, ultimately helping financial institutions mitigate risks and maximize returns. This course is designed to deepen participants’ understanding of how to assess credit risks, manage credit portfolios, and apply risk-based pricing strategies in banking. By the end of the training, participants will be equipped with the skills to effectively analyze creditworthiness, use credit scoring models, manage non-performing loans (NPLs), and apply risk-based pricing techniques to optimize lending decisions.
Objectives
• Understand Credit Risk: Learn the fundamentals of credit risk and its impact on banking.
• Assess Creditworthiness: Develop skills to analyze borrower financial health using key indicators.
• Apply Credit Scoring Models: Understand and use credit scoring systems to assess risk.
• Implement Risk-Based Pricing: Set interest rates and fees based on credit risk profiles.
• Manage Credit Portfolios: Use diversification and monitoring techniques to manage portfolio risk.
• Handle Non-Performing Loans (NPLs): Identify and manage NPLs effectively to minimize losses.
Audience
• Credit Analysts and Loan Officers: Responsible for assessing the creditworthiness of borrowers and making lending decisions.
• Risk Management Professionals: Involved in identifying, assessing, and managing credit risk across the organization.
• Portfolio Managers: Overseeing the performance of credit portfolios and ensuring risk is adequately managed.
• Compliance and Regulatory Officers: Ensuring adherence to credit risk policies, regulatory requirements, and industry standards.
• Relationship Managers: Interacting with borrowers to understand their financial position and assist in lending decisions.
• Senior Banking Executives and Managers: Making strategic decisions related to credit risk exposure and portfolio performance.
• Financial and Business Analysts: Analyzing data and trends to evaluate the financial health of borrowers and institutions.
• Internal Auditors: Assessing credit risk controls and ensuring risk mitigation measures are effective.
Prerequisites
• Basic understanding of banking operations and financial statements.
• Familiarity with credit terminology and risk management concepts is helpful but not required.
Course Content
Day 1: Foundations of Credit
Module 1: Credit Risk Fundamentals
• Definition and types of credit risks: Default risk, counterparty risk, market risk
• Credit risk in the banking environment and its impact on financial stability
• Key concepts: Credit risk exposure, credit risk mitigation, and capital adequacy
Module 2: Credit Risk Assessment
• Introduction to credit analysis
• Analyzing the financial health of borrowers: Key financial ratios and performance indicators
• Understanding the borrower’s ability to repay: Debt service coverage ratio (DSCR), loan-to-value (LTV) ratio
Day 2: Creditworthiness and Pricing Strategies
Module 3: Analyzing Creditworthiness
• Evaluating individual and corporate borrowers
• Assessing the creditworthiness of different types of borrowers (e.g., retail, corporate, SMEs)
• Using qualitative and quantitative factors to determine credit risk
Module 4: Credit Scoring Models
• Overview of credit scoring models: FICO, VantageScore, and internal models
• How credit scores are calculated and their role in risk assessment
• Applying credit scoring models to real-world cases
Module 5: Risk-Based Pricing
• What is risk-based pricing?
• Pricing loans based on the credit risk profile of borrowers
• Strategies for setting interest rates and fees according to risk levels
Day 3: Managing Credit Portfolios and Non-Performing Loans
Module 6: Managing Credit Portfolios
• Portfolio diversification strategies: Industry, geography, and credit quality
• Monitoring credit risk exposure at the portfolio level
• Tools for managing portfolio risk: Credit limits, concentration limits, and stress testing
Module 7: Managing Non-Performing Loans (NPLs)
• Identifying and managing NPLs: Causes and indicators
• Strategies for NPL management and recovery
• Regulatory guidelines and reporting standards for NPLs
