Fundamentals of Bank Credit Analysis

Overview
This seminar will teach participants the framework and tools necessary to analyse bank credit risk, in both developed and emerging markets, utilizing Moody's Bank Financial Strength Rating: Global Methodology. The course will offer a combination of short presentations, discussions, exercises, and case studies.

Learning Objectives
Upon completion of this seminar, delegates will be able to:

• apply a structured framework to analyse banking institutions
• analyse key qualitative risk factors
• identify, calculate and interpret key ratios
• evaluate a bank’s strength based on its published financial information
• apply Moody's ratings tools and methodology to banks in mature and developing markets

Who Should Attend
This seminar is designed for investment and commercial bankers, credit analysts, regulators, central bankers, fixed income professionals, bond researchers (both buy and sell sides), corporate  treasurers, correspondent banking officers and relationship managers involved in exposures to, or for investments in, banks. Owing to the intensive nature of this seminar, some pre-course reading will be essential.

Program Level
Program Level: Introductory
Prerequisites: No prior analytical experience is necessary but familiarity with the activities of banks, their business lines and organization is desirable.
Advanced Preparation: Research documents will be provided giving background to the case study that will be used during the course presentations.
Delivery Method: Group-Live

Course Agenda
Session 1: Moody's Investors Service rating process and Bank Financial Strength Rating

• Global methodology
• Basic accounting for banksBalance sheet
• Income statement
• Notes to the accounts
• Off-balance sheet items
• Derivatives

Session 2: The Operating and Regulatory Environment

• Sovereign environment: economic stability, integrity and corruption, legal system
• Regulation, supervision and support
• Exercise: Evaluate the impact of the operating and regulatory environment on the profitability and asset quality of banks

Session 3: Risk Positioning and Franchise Value

• Corporate governance, controls and risk management
• Financial reporting transparency
• Credit risk concentration
• Liquidity management
• Market risk appetite
• Market share and sustainability
• Geographical diversification
• Earnings stability
• Earnings diversification
• Exercise: Assessing the quality of bank risk positioning and franchise value

Session 4: Quantitative Factors

• Profitability
• Liquidity
• Capital adequacy
• Earnings
• Asset quality
• Exercise: Calculation and interpretation of key quantitative ratios
• Exercise: Concluding determination of Bank Financial Strength Rating

Fundamentals of Bank Credit Analysis Syllabus

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