Monitor the client's financial position. Assessment of the financial condition of the borrower
Banks, loans, deposits
To assess the financial condition of the borrower (individual), banks determine a list of indicators and standard values depending on the terms and volumes of lending, the type of collateral, the type of loan - for the purchase of a vehicle, construction or purchase of housing, etc.
It is determined based on the analysis of its quality characteristics(personal creditworthiness) and quantitative indicators (economic creditworthiness), confirmed by appropriate calculations and documents.
During the consideration by the bank of the issue of granting a loan and subsequently in the process of servicing the debt, the lender must analyze those indicators that may affect the performance of the borrower's obligations. You also need to determine the level of possible impact of these indicators on the customer's creditworthiness, setting for each indicator the corresponding significance scores and standard values.
Borrower's qualitative characteristics:
- Social stability - business reputation, marital status, permanent job;
- General material condition - the presence of real estate, bank deposits, securities, Vehicle and etc.;
- Credit history - the use of other bank services, the intensity of the use of loans in the past, the timeliness of their repayment;
- The health status and age of the client.
Main quantitative indicators:
- Savings on bank accounts - this information provided only at the request of the client;
- Total net income and forecast for the future;
- Collateral (availability of insurance policies, mortgage of immovable and movable property, the possibility of transferring ownership of the credited object) and the level of liquidity of the collateral.
- Coefficients characterizing the current solvency of the client, his financial ability to fulfill loan obligations - the ratio of net monthly profit and monthly payments for a loan / interest on them, as well as the ratio of total expenses and income.
In the process analysis financial situation borrower(natural person), the indicators that are established for the analysis of the activities of enterprises (legal entities) are also taken into account:
- Market factors - the attractiveness of the services or goods offered, the type of area, market size and level of competition, the duration of the borrower's activity in the market;
- Management - business reputation, level of management, connections in the business world, ability and willingness to be responsible for fulfilling loan obligations;
- Forecasting the movement of money flows - the ratio of the loan amount and equity capital, loan amount and monthly money turnover.
Banks should formalize the procedure for assessing the financial condition of clients and develop their own criteria for methods of analysis. One of the approaches to the analysis of the creditworthiness of borrowers (individuals) is a credit scoring system based on a point assessment of risk factors. Credit scoring, in turn, is a kind of a more general method for assessing the position (creditworthiness) of a borrower - rating systems.
At the next stage, aggregation is performed, each client is determined to belong to one of 5 classes, designated A, B, C, D and D. In the process of class identification potential borrower the bank takes into account its current financial condition and assesses its prospects. In addition to the financial position of the borrower, two more parameters are assessed - the level and quality of collateral for the loan operation, as well as the state of the client's servicing of the loan debt (principal and interest).
For analysis of the financial situation of the borrower the bank uses various sources of information:
- Data received directly from the client. These include: financial reporting; documentation confirming the legal and legal status of the client; documentation related to the credited event (business plan, feasibility study, copies of agreements and contracts on the implementation of this event, etc.); information obtained in the course of a previous conversation with a potential borrower, as well as additional information (submitted at the request of the lender) - account statements in other banks, certificates of mortgage rights, certificates from the tax office, etc.
- Intrabank information;
- Information from external sources.
According to the recommendations of the Bank of Russia, commercial banks are required to develop their own methodology for assessing the financial position of large corporate borrowers(hereinafter referred to as the OFPZ methodology), based on a system of indicators of financial performance of borrowers, as well as indicators of business and industry risks.
Techniques of various banks: characteristics and features
Methodology for assessing the financial position of large corporate borrowers and the system described in it financial indicators, as well as the scoring system for each group of coefficients for business risks (business and industry risks) must comply with the requirements and recommendations of the Bank of Russia, be drawn up as a separate regulation and approved by the bank's board. In some cases, for example, if a Russian bank is part of an international financial group (the parent organization is located in another country), in addition to the requirements of the Bank of Russia, the OFPZ methodology must meet the criteria and requirements of the parent company.
The Bank of Russia recommends that banks annually adjust the approaches set out in the OFPZ methodology, as well as a set of coefficients for assessing the performance of enterprises, taking into account the existing economic situation going beyond the "classical" financial analysis. It is worth paying special attention to quality parameters, that is, the specifics of the industry in which the borrower operates, to focus on business reputation, positive qualifications of managers, the dynamics of the company's profitability, including in the face of fierce competition and aggressive government policy in recent years. It is also necessary to develop techniques for determining the reliability and reality. financial statements potential borrower, which will help to timely identify the symptoms of financial danger.
Each bank uses its own methods and tools for analyzing the creditworthiness of large corporate borrowers. The reasons for this diversity may be different degrees of confidence in quantitative and qualitative methods of assessing creditworthiness factors, historically established individual principles, lending culture and practice of assessing creditworthiness, the use of a certain set of minimization tools. credit risk.
To assess the financial condition and creditworthiness of a large corporate borrower - a legal entity (except for credit institutions), objective indicators of its activities should be taken into account:
- the volume of product sales;
- profit and loss;
- profitability;
- liquidity and turnover ratios;
- cash flows (receipt of funds on the accounts of the borrower) to ensure the repayment of the loan and the payment of interest on it;
- composition and dynamics of receivables and payables;
- availability of reliable sources of loan repayment;
- relationships with contractors;
- dependence on suppliers and buyers;
- other parameters characterizing the financial and economic activities of the enterprise.
In addition, banks must take into account the business risks of the borrower (business and industry risks). Indicators for assessing such risks are often subjective (in international banks, these criteria are placed in a separate block and analyzed more thoroughly):
- efficiency of enterprise management (participation of shareholders in management);
- the borrower's market position and its dependence on cyclical and structural changes in the economy and industry;
- the presence of state orders and state support of the borrower in a particular region or industry (for example, reimbursement of a part of the paid excise taxes from the federal budget of the region to alcohol production enterprises);
- repayment history credit debt the borrower in the past;
- the possibility of introducing restrictions on the production and (or) supply of products (or raw materials for its production), including export / import;
- the level of competition in the industry typical for the region;
- international risks (sales and delivery of products, political instability in the country of the manufacturer / buyer), etc.
All OFPD techniques have their own similarities and differences. Each technique has its own advantages and disadvantages. Let's conduct a comparative analysis of methods for assessing the financial position of large corporate borrowers.
Comparison of methods for assessing the financial position of large corporate borrowers of various banks
Bank # 1 (Russian subsidiary of one of the international banks)
To determine the credit risk limit, a quantitative and qualitative assessment of two groups of risk factors is carried out, each with a score:
1.Disclosure of the client's risks, their characteristics:
- risks of business owners;
- customer group risk;
- company management risks;
- industry risks;
- financial risks;
- relations with banks;
- risks associated with the business plan, customer limit;
2. disclosure and qualification of the transaction risk. The financial condition of the borrower is assessed based on four groups of ratios: profitability, liquidity, turnover and financial stability.
Evaluation of the results of calculating the coefficients is that after calculating the indicators, depending on the industry, the sum of points is calculated taking into account the weight of the indicator.
After that, the final score for the analysis of financial reporting indicators and financial position are determined: good / average / bad (according to the Bank of Russia Regulations dated March 26, 2004 No. 254-P, dated March 20, 2006 No. 283-P)
Advantages. Ease and transparency of the assessment. Accounting for quantitative and qualitative indicators of the borrower's creditworthiness. For each group of factors, the analyst indicates not only points, but also positive and negative factors... Analysts are not limited to accounting and reporting data. The credit history and business reputation of the borrower are taken into account. The effectiveness of management is taken into account, including the level of top managers. The position of the borrower in the industry and the region, the level of penetration of modern technologies are taken into account. Flaws. A large volume of assessed indicators (two groups, each of which is divided into indicators). The need for industry risk assessment: The analyst should be aware of all industries in which borrowers operate. Short terms of assessment (no more than two days). Writing an opinion in English.
Bank # 2 (included in the top 4 large Russian banks)
To determine the credit risk limit, a quantitative and qualitative assessment of five risk groups is carried out:
- risks associated with the structure of the share capital and the internal structure of the corporate client;
- risks associated with the borrower's credit history and business reputation;
- risks associated with management efficiency;
- risks associated with the position of the borrower in the industry and the region, production equipment and the level of penetration of modern technologies;
- risks associated with the financial condition of the borrower.
The financial condition of the borrower is assessed based on three groups of indicators. Evaluation of the results of calculating the coefficients consists in assigning a category for each of these indicators based on a comparison of the obtained values with the established sufficient values. After that, the sum of points is calculated taking into account the weight of the indicator, the creditworthiness class of the borrower is determined and a conclusion is made about the possibility of issuing a loan
Advantages. Ease and transparency of the assessment. Accounting for quantitative and qualitative indicators of the borrower's creditworthiness. The information used by analysts is not limited to accounting and reporting data. The structure of the share capital and the internal structure of the corporate client are taken into account. The credit history and business reputation of the borrower are taken into account. The effectiveness of management is taken into account, including the level of top managers. The position of the borrower in the industry and the region, the level of penetration of modern technologies are taken into account. Each of the coefficients used to assess the financial condition has a reference value with which its calculated analogue is compared. Upon full repayment of overdue debt, the creditworthiness class is restored. Flaws. The rating score does not take into account all the key attributes of the client. The reference value of the coefficients is not differentiated for individual industries with a different structure of assets and liabilities. The reference value of the coefficients is not differentiated on a territorial basis. Weighting factors are subjective, while minor shifts in the system of these factors can fundamentally change the final result and transfer the borrower from one class to another. The indicators used in the analysis of creditworthiness are calculated on the basis of reporting data, which do not allow assessing the creditworthiness of the borrower in the future. In determining the class of the borrower, information about estimated cash flows and financial results is not taken into account. Any errors and inaccuracies in determining the critical value of the sum of points can give a fundamentally incorrect result.
Bank number 3 (one of the Russian agricultural banks)
Financial position is the most important characteristic of the reliability of a legal entity. Financial analysis includes the following steps:
- analysis of the composition, structure and quality of the balance;
- analysis of performance results;
- calculation of indicators of liquidity, solvency and turnover, other quality indicators;
- conclusions about the financial position based on the results of the analysis;
- forecast of development prospects.
When determining the financial position of a legal entity, the calculated indicators are compared with the industry average values and analyzed over time.
Based on the results of the review, a conclusion is made indicating the criteria on the basis of which the financial position of the borrower is assessed as good, average or bad.
Advantages. Ease and transparency of the assessment. Accounting for quantitative and qualitative indicators of the borrower's creditworthiness. Availability of specially developed formulas for determining the financial position of the borrower. The presence of corrective factors taken into account when assessing the financial condition of a legal entity. Use of reference values of financial ratios differentiated by industry. Taking into account changes in indicators in dynamics with the subsequent construction of a forecast. A long analyzed period, which allows you to build an accurate forecast of the borrower's prospective creditworthiness. Flaws. Lack of formal assessment of non-financial parameters. Non-financial indicators are considered additionally and do not make a significant contribution to the assessment results. Any errors and inaccuracies in determining the critical value of the sum of points can give a fundamentally wrong result. The reference values of the coefficients are not differentiated on a territorial basis.
Note that all methods for assessing the financial position of large corporate borrowers have common drawbacks:
- incomplete methodological base for assessing the non-financial parameters of the borrower (lack of common bases with available customer information such as tax payments, credit turnover in other banks, the presence of card files, etc.). This is the main drawback inherent in all of these techniques;
- non-transparency of doing business (when assessing the financial condition of an enterprise, it is necessary to apply a combined analysis of management and financial reporting, since the latter does not allow external users to see the real picture of the business in question, and therefore, to understand the real risks of lending to the enterprise).
Another drawback, inherent not only in the presented, but also in all Russian methods, is associated with the peculiarity of doing business in Russia, in particular, the weak transparency of the financial and economic activities of enterprises. Thus, any methodology for assessing the creditworthiness of a legal entity is highly sensitive to distortion (unreliability) of initial data, especially financial statements.
The above OFPZ methods show that one of the main areas of analysis of a borrower's condition in assessing his creditworthiness is financial analysis. Various aspects of financial analysis as a specific system are reflected in all the presented methods for assessing the quality of potential borrowers used by banks. Analysis of the financial condition of the borrower is the most significant characteristic of his creditworthiness. And each commercial bank establishes a specific set of financial indicators and their normative values independently, since today there are no normative documents regulating this area.
Symptoms of Potential Financial Risk for the Bank
In practice, in order to correctly assess the financial position of a client and draw timely conclusions about his creditworthiness and the feasibility of concluding a transaction, an integrated scheme for analyzing the risk profile of a transaction in the corporate lending segment is used, divided into financial blocks (Figure 1).
Picture 1. Scheme for analyzing the risk profile of a transaction in the corporate lending segment
Thus, the risk analysts of the bank (whether it is a large Russian bank, an international bank or a regional branch) should formulate for each credit transaction a clear description and justification of the financing purpose, the structure of the transaction, its risk profile (a transaction with increased risk, moderate risk or risk-free). transaction), as well as assess the risks when analyzing the financial position of the client.
When financing working capital, it is necessary to analyze the operating cycle of the company, the reasons and timing of the shortage of working capital, the timing and sources of replenishment of working capital. The structure of the transaction must correspond to the operating cycle (sample in the "low" season, repayment - in the "high" season, etc.), that is, it must be explained why the borrower is offered this very structure of the transaction.
A brief description of the cash flow model should include:
- the main assumptions on the basis of which the forecast of the movement of funds from operating activities was made (revenue remains at the same level / increases for one reason or another; the same with expenses);
- data on loan repayment (conclusion about the risk of refinancing);
- stress test results;
- sensitivity analysis;
- conclusions.
Next, you need to analyze the sources of loan repayment: what determines the flow of funds, what are the possible negative factors, whether the bank satisfies (and why) the primary source of repayment. The availability of collateral can be seen as an additional comfort factor (but not as a basis for making a decision).
After that, the financial analyst provides in his conclusion a description of the business model of the borrower / group: manufactured / sold products, features of the production cycle, seasonality, conditions under which sales are made, specifics of settlements with counterparties, suppliers / customers (dependence), competitive advantages (reasons and the purpose of purchases from this particular borrower, the possibility of reorientation to another manufacturer), pricing (what factors affect the price), business risks, interests of shareholders in this business, etc.
This also includes figures on the dynamics of production / sales with an explanation of the main factors determining this dynamics (how and by what means the borrower survived the crisis, what are its market positions and prospects). It would also be good to evaluate the effectiveness of the business model in comparison with similar enterprises. If there is a group, it is necessary to explain the intra-group relationships, commodity and cash flows.
The section "Financial analysis" should include a description of the causes and consequences of the dynamics and structure of the main indicators of the income statement and balance sheet, as well as an analysis of the coefficients. All indicators should be considered from the point of view of their impact on the company's ability to fulfill its loan obligations, that is, to organically lead to a conclusion about the good / average / unsatisfactory financial condition of the borrower. Particular attention should be paid to the size of the debt, its structure by maturity, to assess the refinancing risk and the bank's position relative to other creditors.
The final section of the conclusion of the risk analyst should contain conclusions - an assessment of the total risk when lending to a client (strengths and weaknesses of the client's activities, business transparency, credit history in banks, the dependence of the borrower's financial condition on the activities of related structures, the lack of consolidated reporting for the group, etc.) ...
In addition, an important and integral element of the analysis of the financial situation of the borrower is the timely identification of symptoms and signs of possible financial danger for the bank (in banking terminology, this is called EWS - Early Warning Signals, or "early signals / signs of problem") both at the stage of issuing a loan, as well as and in the process of monitoring the loan until it is fully repaid. In banking practice, a separate large section in the OFPZ methodology is devoted to the criteria for determining early symptoms / signs of problematicity, as well as their set (Table 1).
Table 1. Early signals and signs of problematicity in the methodology for assessing the financial position of large corporate borrowers of various banks
Signals of possible financial danger | Signs of an impending financial crisis in the client's activities |
---|---|
Financial signals | |
Lack of receipts under contracts with buyers / customers and, as a result, lengthening the terms of settlements with suppliers | Systematic violation of the conditions for maintaining credit turnover in the bank due to the lack of receipts for the work performed / services rendered / delivered goods from buyers or customers |
Absence of newly concluded contracts for the provision of goods / performance of work / provision of services (business winding down) | Significantly exceeded the agreed credit limits at the bank (s) |
The presence during several reporting periods in a row of negative values of lines 2400 ("Net profit (loss) of the reporting period") of Form No. 2 and 1300 (total for the sections "Capital" and "Reserves") of Form No. 1 of the quarterly reporting in accordance with RAP | |
Exceeding the value of the indicator of the total debt burden (Total Debt / EBITDA) according to the quarterly / annual official reporting of the borrower in accordance with Russian Accounting Standards, established at the level of 3.5 | Opening by the borrower of current accounts in other credit institutions without notifying the creditor bank, transfer of all funds |
Non-financial signals | |
Establishment of production of previously unreleased products and development, in this connection, of a new sales market | Inappropriate spending of the funds received from the loan |
The emergence of a client's dependence on loans (usually short-term) due to increasing overhead costs | Minor and irregular cash flows from the sale of goods, especially in combination with significant payments to suppliers and an unjustified increase in sales on credit |
Customer's omissions in control over their working capital (total excess of inventory, overstocking, illiquid assets, etc.) | Payments to other credit institutions or a sharp increase in the number of inquiries from them about the financial condition of the client |
The client has large and unplanned losses | Client manipulation with checks |
Unexpected radical changes in the composition of the company's management or unfavorable trends in the development of the industry | The client's violation of the deadlines for the preparation of reports or submission to the bank of the necessary financial documents(this is often due to their falsification). Clients' explanations of the reasons for delays are in themselves signs of a problem with the loan. |
Client requests for additional funds in excess of previously agreed limits | |
Any unmotivated failure to comply with obligations |
Banks are obliged to monitor changes in the structure of shareholders of the borrowing company, the state of its business as a result of financial / political instability in the country and the economy in order to make sure that its financial position is stable and that it meets the conditions loan agreement, as well as to search for new opportunities for business cooperation with the client. Loan monitoring is necessary in order to promptly identify signs that the borrower may have difficulties in repaying the loan (examples of early warning signals about the problem of corporate clients are discussed in the figure below). This should be done early in order to maximize the effect of the bank's corrective actions and reduce its losses.
Figure 2. Warning signals about problematic corporate clients
The human factor is one of the most serious obstacles to the early detection of problem loans. Employees responsible for the analysis of corporate borrowers often do not report alarms due to their ignorance, heavy workload and tight deadlines for assessing the financial situation of clients, as well as due to the lack of an automated system for detecting and preventing early signals / signs of problem in Russian banks (in European banks such a system is widely used).
Experience shows that problem loans, even after they have been identified, often turn out to be much worse than the bank employees thought. But the situation can be even worse if the bank's management, knowing about the problems of its loan portfolio, hides them and at the same time tries to compensate for losses by issuing risky loans and speculation. To avoid this, banks conduct periodic independent reviews by the internal audit function in order for it to identify missing or hidden signs of problem loans by employees. Supervisory and regulatory inspections (the Bank of Russia, external audit firms) also often reveal unnoticed problem loans. In the process of effective credit risk management, the bank's internal control department is the first to identify problem loans. The measures to be taken in case of such a detection are reflected in the following figure.
Figure 3.
Monitoring loans is especially important not only at the stage of considering a loan transaction, but also at all stages of the loan process, especially at the stage of loan repayment or when it becomes overdue, or in case of violation of the terms of the minimum collateral amount or the value of financial ratios established by the loan agreement. In order to avoid violations of credit agreements, as well as to ensure timely elimination of them, the bank is developing a methodology for assessing the financial position of large corporate borrowers, which not only provides for an assessment of the borrower's creditworthiness as the main way to reduce credit risk, but also includes general principles. Using these principles, it is not difficult to identify early signs of problem in a timely manner and try to eliminate or prevent a loan delinquency or borrower default.
Based on the article: Finogeev D.G., Shcherbakov E.M. Assessment of the creditworthiness of legal entities using the example of the largest banks Russian Federation// Modern problems of science and education. 2013. No. 6.
Starting positions and problems
For the creditor bank, the financial solvency of the borrower is important insofar as he expects to receive back the amount issued as a loan and interest on it in time. Such consistency of the borrower is expressed in his solvency and creditworthiness.
Solvency is the ability (availability of opportunity) and readiness (availability of desire) of a legal entity or individual to repay its monetary obligations (debts) in a timely manner and in full. In contrast, creditworthiness is the ability and willingness of a person to pay off their credit debts in a timely manner and in full (principal and interest). Creditworthiness is a narrower concept than solvency. To decide to issue a loan to a given borrower, the bank needs only to be convinced of its creditworthiness, it is not necessary to consider the issue in a broader sense (although it is clear from the ratio of the concepts that the borrower's solvency also presupposes that he has the ability to pay off the loan).
There is one more difference between the considered concepts. The borrower must repay his usual monetary obligations (except for credit), as a rule, at the expense of the proceeds from the sale of his products (works, services). As for credit debt, in addition to the above, it has three more sources of repayment (albeit not always reliable): 1) proceeds from the sale of property accepted by the bank as collateral against a loan, 2) a guarantee (surety) of another bank or another person; 3 ) insurance claims Consequently, a bank that competently gives loans can count on full or at least partial reimbursement of them even in the case when the borrower turns out to be insolvent in the usual sense of the word 1.
Lending activities of Russian banks, along with other circumstances, are complicated by the lack of a proven methodology for assessing creditworthiness in most of them and the lack of an information base for a full-fledged analysis.
1 This chapter examines the creditworthiness of borrowers in relation to short-term and, in part, medium-term lending (current creditworthiness). The ability of an enterprise to receive, use and timely repay, in accordance with the terms of the agreement, a medium and long-term loan for investment purposes (investment creditworthiness) is a special ability and a separate problem, which will be discussed in Ch. 21.
lisa of the financial condition of clients. Most medium and small banks do not have a proper analytical apparatus at all and do not maintain contact with special information, analytical and consulting services, the information of which can help to more accurately assess the creditworthiness of borrowers.
When assessing the creditworthiness of borrowers, in fact, two big questions must be answered:
1. How to assess the prospective financial solvency of the borrower (ie, how to make sure whether he will be able to fulfill his monetary obligations on the loan by the time the loan agreement expires)?
2. How to assess to what extent he is ready to fulfill the specified obligations (ie, whether he wants to do this, can he be trusted)?
To adequately assess the creditworthiness of the borrower means to answer both of these questions reasonably and conclusively.
The solution to both issues is possible only if the bank employees have the opportunity to obtain the information necessary for analysis and are able to competently process and interpret it.
The study of the creditworthiness of potential borrowers is associated with significant difficulties.
In our country, it is still difficult to obtain meaningful financial and other information about the borrower (available financial and statistical reporting it does not always allow for a detailed and in-depth analysis of the borrower's financial position), especially since such information does not yet have a representative historical retrospective from the point of view of work in market conditions. However, it is important that bank staff constantly and actively seek adequate data.
Creditworthiness depends on many factors. And this fact in itself means difficulties, since each factor (for a bank - a risk factor) must be assessed and calculated. Added to this is the need to determine the relative “weight” of each individual factor for credit status, which is also extremely difficult.
It is even more difficult to assess the prospects for changes in all those factors, causes and circumstances that will determine the borrower's creditworthiness in the future. The borrower's ability to repay the loan has real meaning for the creditor only if it refers to the future period is a forecast of such ability, and the forecast is sufficiently substantiated, plausible. Meanwhile, all the indicators of creditworthiness used in practice are turned into the past, since they are calculated using data for the past period or periods, moreover, these are usually data on balances ("stocks") on reporting date, and not more accurate data on turnovers ("flows") for a certain period. All of this suggests that all credit metrics are of limited value in some way.
Additional difficulties in determining the creditworthiness arise due to the existence of such factors, the value of which cannot be measured and evaluated in figures. This applies primarily to the moral character, reputation, credit history of the borrower. The corresponding conclusions can never be recognized as irrefutable.
Finally, significant difficulties are generated by inflation, which distorts indicators characterizing the possibility of repaying credit debt (this applies, for example, to indicators of the turnover of capital and its individual parts - assets, fixed capital, stocks), and unequal dynamics of the volume of turnover (due to the outstripping growth in prices for products sold) and the valuation of balances (fixed assets, inventories).
It is impossible to obtain a unified, synthetic assessment of the borrower's creditworthiness with the generalization of digital and non-digital data. For a reasonable assessment of creditworthiness, in addition to information in digital values, an expert assessment of qualified analysts is needed.
At the same time, the complexity of assessing creditworthiness determines the use of various approaches to such a problem, depending both on the characteristics of the borrowers and on the intentions of a particular creditor bank. In doing so, it is important to emphasize: different ways credit ratings do not exclude, but complement each other, i.e. they should be used in combination.
Approaches to assessing the financial solvency of clients
Let us first turn to the richer experience of Western banks. The methods used by them to determine the financial condition are in many ways similar and even often repeated. Nevertheless, with a certain degree of conventionality, they can be divided into two categories: focused on the "normal" borrower; considering borrowers in terms of how close they are to financial insolvency (bankruptcy).
Many methods ("systems") have been developed for evaluating borrower candidates. The most interesting are the PARSER and CAMPARI methods. Their names are formed from the initial letters of the following English words.
So, in the practice of European, American and some Russian banks, the CAMPARI method has become widespread. The analysis in accordance with this methodology consists in sequentially separating from the loan application and the documents attached to it the most significant factors that determine the client's activities, in their assessment and clarification after a personal meeting with the client. It is easy to see that this and other methods pretend to be a comprehensive assessment of the client, and not just to find out the level of his financial solvency. This circumstance can be interpreted at the same time as an advantage of the techniques, and as their disadvantage.
Audited financial statements serve as an important source of information about the borrower for the bank. Its analysis (usually over the past three years) allows us to identify both the positive aspects of the company's activities, and errors that increase the credit risk, which are a harbinger of financial danger.
It is very important to analyze the potential sources of loan repayment, which are: 1) the profit of the enterprise or the income of an individual; 2) funds provided as collateral for a loan; 3) a sufficient volume of assets suitable for sale; 4) guarantees provided by the borrower (for example, the right to seize personal property to repay the loan). Basic information about the state of these sources is contained in the balance sheets and reports on income, expenses and profits (in the case of individuals - in documents on income and personal property).
An assessment of its financial position helps to resolve the issue of the creditworthiness of a legal entity. For this, a complex analysis is usually applied using a large number of financial indicators. Particular attention is paid to the dynamics of the company's profitability.
Symptoms of a possible financial danger for the bank may be: the establishment by the enterprise of the production of previously unreleased products and the development of a new sales market in this regard; the emergence of a client's dependence on loans (usually short-term) due to increasing overhead costs; the client's failure to control his working capital(total surplus of inventory, etc.); the client has large and unplanned losses; violation by the client of the deadlines for preparing reports or submitting the necessary financial documents to the bank (this is often due to their falsification); client requests for additional funds in excess of previously agreed limits; any unmotivated failure to comply with obligations.
There are signs that allow the bank to draw a conclusion about the impending financial crisis client: significant excess of the agreed limits; misappropriation of the funds received from the loan; scarce and irregular receipts of money from the sale of goods, especially in combination with significant payments to suppliers and an unjustified increase in sales on credit; payments to other credit institutions or a sharp increase in the number of requests from them about the financial condition of the client; manipulation of the client with checks.
Western banks use various statistical (probabilistic) methods to assess the risk of bankruptcy of enterprises applying for bank loans. This probability can be expressed in terms of scores, and therefore this method is called "scoring".
There are different scoring methods. Most often, to assess the risk of bankruptcy of an enterprise, indicators are used that are calculated on the basis of balance sheet data and the enterprise's report on the results of its activities. In the very general view the financial position of the enterprise is assessed by the formula:
Р = К1 Ш + К2 П2 + ... Кп Пп,
where P is the overall assessment of the financial position of the enterprise in points, which determines the risk of bankruptcy; the higher the score, the lower the risk; W, P2, etc. - indicators (in most cases, they represent the ratio of some balance sheet indicators to others); Kl, K2, etc. - coefficients assigned in advance to each of the indicators P1, P2, etc.
Examples of such indicators and ratios are the well-known models developed by the American Altman in 1968 and the Bank of France in 1982.
The main problem in the practical use of these and other scoring models is to ensure the coherence and consistency of various indicators. Many banks, in order to achieve more accurate estimates, combine various indicators and ratios at their discretion.
The methods of analyzing the financial condition of the borrower in the recommendations of foreign experts usually boil down to two key points:
A group of indicators is taken, on the basis of which coefficients are calculated that characterize various aspects of the borrower's activities;
The obtained values of the coefficients are compared with the values recommended as normative (or critical).
In the practical implementation of this technology, a number of problems have to be solved. The first problem is how many and what indicators to use for analysis.
The number of calculation ratios recommended for the analysis of financial condition can be unlimitedly large. Some computer programs for such analysis contain 100 or more coefficients. General rule, apparently, it can be like this: the purpose of the analysis should determine the number and set of necessary coefficients. "Necessary" - this is the minimum range of significant (independent) coefficients, the analysis of which will be recognized as mandatory. The rest will be considered auxiliary and can be analyzed secondarily, if necessary. Hence, it is clear that the correct choice of the list of analyzed coefficients ultimately depends on the economic qualifications of the loan officer (analyst, expert).
World banking practice has developed many different groups of financial ratios that, in principle, can be used to analyze the financial condition of the borrower. The most famous can be considered the following classification (all its elements are described in detail in the financial and banking literature).
Liquidity ratios - current liquidity ratio (the so-called coverage ratio); operational liquidity ratio.
Efficiency (turnover) ratios - turnover ratio accounts receivable; stock turnover ratio to-
varna material values; fixed assets turnover ratio; asset turnover ratio.
Financial leverage ratios (depending on attracted sources) - calculated in relation to assets, capital, etc.
Profitability ratios - profitability ratios; profitability ratios; profitability ratios of shares.
Debt service ratios are calculated as the ratio of the borrower's total profit to certain payments pending.
The use of the listed and similar indicators is complemented by an assessment of the financial condition of the borrower based on:
Cash flow analysis - determining the difference between cash receipts and expenses of the client for a certain period;
Business risk analysis - identifying the possibility that the client's funds turnover may not be completed efficiently enough.
It turns out to be a very cumbersome scheme. Taking this into account, experts continue to search for a more "compact" minimum sufficient set of indicators.
The second problem is what values of the coefficients are considered “normative” or “critical”. In the West, the values of the coefficients characterizing the firm are recommended to be compared with its earlier indicators and with the average indicators for the industry to which the given enterprise belongs. In our conditions, it is difficult, if not impossible, to implement such a recommendation. Comparison with their previous indicators is often impossible due to the constant change in the "rules of the game" ( tax law, other regulations). It is even more difficult to compare the indicators of the analyzed enterprise with the “normative” ones, since there are simply no such indicators. In the Russian financial analysis the possibility of using industry average indicators as standards is declared, but none government agency does not make such calculations. The regulations of the Bank of Russia also do not determine the procedure for conducting financial analysis.
Approaches to assessing a client's readiness to repay a loan
As noted above, the bank should, if possible, make sure that the borrower wants to repay the loan and pay interest on it. In a sense, this is an even more difficult task than assessing the financial solvency of the borrower, since it concerns such characteristics as personal qualities, moral character, reputation, etc. It seems that banks can and should judge such qualities of their clients only indirectly, by indirect evidence.
For this, first of all, information is needed, the sources of which in this case may be: negotiations with a potential borrower; external sources; internal sources (archive of the bank itself); on-site inspections.
For foreign banks, the first source of external information is credit associations, banking groups whose members often meet and exchange customer information. The second source of external information is specialized government agencies, private agencies of a fairly wide profile and credit bureaus that collect and sell credit information. Banks
they can also use the information of auditors, suppliers, buyers, competitors of firms of interest to them, banks that cooperated with them, as well as the media. Finally, there is a large number of reference books and analytical reports that can also be used in credit work.
The most important part of the information obtained through these channels can be considered information that reflects the actual credit history of the borrower. Many countries have achieved significant success in this regard, having fine-tuned the work of credit bureaus.
In Russia, at present, both specialized divisions of a number of credit institutions (in their own interests) and some commercial firms that provide unofficial information on a paid basis are engaged in collecting information on the financial condition of clients. Scattered databases have been created that function without mutual exchange of information. In fact, Russian banks can replenish information about clients only by their own information and analytical services and security services (if any). The offices of the largest foreign rating and consulting agencies operating in the country have information mainly about foreign companies and can be useful to banks only if the latter operate in the external market.
The abnormality of this situation has long been obvious. The question of the formation of a nationwide database on credit transactions can be considered clearly overripe. Banking structures Russia has been trying for many years to organize interaction in this direction, including within the framework and with the participation of the ARB. However, for a number of reasons (insufficient elaboration of the legal and methodological aspects of the problem, disagreements between credit institutions in matters of providing information about their clients, etc.) attempts to create appropriate large-scale structures have not yet been crowned with real success. Until recently, there was no corresponding legislative framework... Therefore, separate groups of banks tried to combine efforts aimed at studying the financial condition of borrowers.
Only at the very end of 2004 was the Law "On Credit Histories" No. 218-FZ adopted (coming into force in the second half of 2005), according to which commercial credit bureaus will be established in the country, and banks will be obliged to supply these bureaus with some information about their borrowers - individuals (with the permission of the latter). This legislative decision appears to be palliative.
Credit histories containing objective information about business contacts of legal entities and individuals with banks are useful in that they allow bank employees not intuitively, but on the basis of facts, to judge the personal qualities and business reputation of each applicant for a loan.
Speaking about the reputation of a borrower, they usually mean his mental type, competence, truthfulness, decency and sincerity of intentions to effectively use the loan and return it on time with interest. Moral virtues
the borrower as an entrepreneur is associated with his ability to reproduce the funds received on a scale that ensures debt repayment, since the borrower's moral qualities are manifested in one way or another in his behavior, in the methods and results of entrepreneurship. Thus, the main way to assess a client's reputation is to try to find out about his professional success and the correctness of fulfilling previously taken credit obligations.
In general, the analysis of the borrower's reputation includes: assessment of the main non-financial indicators of the borrower's activities and parameters of the loan application; studying the profile of the borrower; study of the composition of the founders (participants) and the goals of the borrowing company; assessment of the level of management in the company (personal qualities of managers, qualifications, experience of managers, their abilities and desire to work for the “good of the company”, rationality of the organizational structure, literacy of documentation, “production climate”, etc.).
This control, implemented in the form of a system of in-depth monitoring of the financial condition, will help to immediately respond to negative trends in the financial and economic activities of borrowers.
The current macroeconomic situation in the Russian Federation leads to the emergence of a large number of risks, which are manifested in both financial sphere and in the realm of production. It should be noted that the current economic situation has revealed all the problems of corporate governance, not only among the borrowing companies, but also among the credit institutions themselves. According to a number of experts, the share of problem loans in the loan portfolio of some large banks is currently approaching 10-15%.
Since September-October 2008, virtually all banks have tightened requirements for new borrowers in terms of collateral and creditworthiness. They revised the parameters of the financial and economic activities of new borrowers that suit the lenders. Banks began to take a closer look at the activities of already existing borrowers.
What is in-depth monitoring and why is it needed
In-depth monitoring is carried out in an unstable economic situation with the aim of a faster response in the event of a borrower's problems.
In-depth monitoring differs from the usual:
The frequency of the event;
A large amount of considered information;
Complex nature.
Monitoring is a periodic assessment of the financial condition of a borrower based on financial statements in order to determine the likelihood of loan repayment and the estimated provision for possible loan losses.
According to the Regulation of the Central Bank of the Russian Federation of March 26, 2004 No. 254-P "On the procedure for the formation by credit institutions of reserves for possible losses on loans, on loan and equivalent debts" (hereinafter - Regulation No. 254-P), the assessment of credit risk for each issued loan ( professional judgment) must be carried out by the credit institution on an ongoing basis.
A credit institution, in accordance with the procedure established by the authorized body (authorized bodies) of the credit institution, documents and includes in the borrower's dossier information about the borrower, including the credit institution's professional judgment on the level of credit risk for a loan, information on the analysis, based on the results of which professional judgment was made , conclusion on the results of assessing the financial position of the borrower, calculation of the provision.
These documents are drawn up:
For loans to individuals - at least once a quarter as of the reporting date;
For legal entities that are not credit institutions - at least once a quarter as of the date following the reporting date;
For loans to credit institutions - at least once a month as of the reporting date.
Factors leading to in-depth monitoring:
The need to understand the real state of affairs for specific borrowers and in the industry as a whole;
Growth in non-payments;
An atmosphere of widespread distrust in the corporate and financial sectors;
An increase in the number of defaults on corporate bonds;
A decline in production in the main sectors of the economy;
Refusal of the majority of banks to provide loans, even at open limits;
Requirements of Regulation No. 254-P, Regulation of the Central Bank of the Russian Federation of March 20, 2006 No. 283-P "On the procedure for the formation of reserves for possible losses by credit institutions", as well as the need to determine a reserve for possible losses on loans, including for the purpose of generating bank statements on IFRS.
As can be seen from the figure, the two types of monitoring complement each other, since the monthly monitoring is not carried out on the dates of the quarterly monitoring.
Table 1. Differences in the content of quarterly and monthly monitoring
Industries most affected by the crisis
In our opinion, factors contributing to the classification of the industry in which the borrower operates as problematic may be as follows:
A significant drop in demand for products;
The main product of the industry is not a basic commodity;
Significant production costs;
The industry is heavily dependent on government orders;
The industry's products are exclusive and targeted at a specific group of buyers.
Based on these factors, the problem sectors include:
Wholesale trade;
Trade in luxury goods (luxury);
Car trade;
Building;
Metallurgy.
It should be noted that enterprises operating in these sectors do not necessarily experience serious financial difficulties, but it is necessary to pay special attention to market factors in the analysis of their financial activities.
Documents required for monitoring the condition of borrowers
Based on the type of monitoring, documents requested from borrowers can also be divided into two groups: documents requested quarterly and documents requested monthly. The grouping of documents is shown in Table 2.
Table 2. Documents requested in the framework of financial monitoring
Quarterly monitoring based on accounting statements
The analysis algorithm based on financial statements can be presented as follows:
Vertical and horizontal analysis of the balance sheet and income statement;
Research of accounts receivable and payable, stocks, financial investments, loans and credits;
Study of liquidity and solvency;
Financial stability analysis;
Business activity analysis;
Profitability analysis;
Analysis of market and non-market factors.
Usually, credit institutions assess the financial condition of a borrower based on their own methodology, which most often involves calculating a rating based on a number of financial indicators. Let us dwell on the most important components of monitoring in the current conditions.
RESEARCH OF ACCOUNTANTS
As part of monitoring, a decryption of accounts receivable is requested (p. 240, 241, 246, and other balances). In general, at least 80% of all receivables, as well as all debtors whose debt is at least 5% of all receivables, must be deciphered, indicating the counterparties.
Debt analysis examines:
Dynamics of accounts receivable and its comparison with the dynamics of revenue;
The presence and dynamics of overdue accounts receivable (determined according to the borrower's data, as well as on the basis of the dynamics of reserves for doubtful debts account 63);
Accounts receivable structure (dependence on large buyers, customers, identification of companies affiliated with the borrower);
Determination of the main forms of settlements with customers and their change.
STOCK RESEARCH
Stocks can be classified:
For raw materials and supplies;
Work in progress costs;
Finished products;
Goods shipped;
Future spending.
During the analysis of reserves, the following are investigated:
Stock structure;
Stock dynamics.
In addition, it is necessary to compare the dynamics of work in progress and finished goods with the dynamics of revenue, receivables and payables.
RESEARCH OF LONG-TERM AND SHORT-TERM FINANCIAL INVESTMENTS
As part of monitoring, they usually request a detailed breakdown of long-term and short-term financial investments, pages 140 and 250 of the balance sheet, indicating the names of specific investments. During the analysis of financial investments, the following are investigated:
Dynamics of financial investments;
The structure of financial investments;
Financial investment goals;
Sources of investment financing;
The liquidity of financial investments and the possibility of their quick implementation.
RESEARCH OF MARKET AND NON-MARKET FACTORS
The relationship between market and non-market factors is shown in Table 3.
Table 3. Market and non-market factors
Monthly monitoring of financial condition
The analysis algorithm can be represented as follows:
Research of revenue;
Research of receivables and payables, identification of problem debts;
Research of stocks, financial investments, loans and credits;
Analysis of turnovers in banks and the borrower's cash flow plan;
Monitoring the condition of the collateral.
The following can be noted as features of the monthly monitoring.
In relation to accounts receivable, accounts payable, inventories, financial investments, loans and credits, the analysis is carried out similarly to quarterly monitoring, however, the basis for the analysis is not financial statements, but the balance sheets of accounting accounts.
As part of the study of receivables and payables, the balance sheets are requested for accounts 60, 62, 76 for a certain period, broken down by counterparties, or for a breakdown of receivables or payables at a specific date, indicating overdue. The objectives of debt analysis are:
Comparison of accounts receivable and payable with reporting data or data from the previous month and identifying trends;
Identification of changes in the structure of debt and the reasons for its change;
Identification of overdue debt (can be indirectly found by identifying debtors and creditors for which the debt is growing or does not change for a long time);
Identification of affiliated companies in the structure of debt, determination of possible changes in the scheme of work or forms of settlements with counterparties.
As part of the study of reserves, balance sheets are requested for accounts 10, 20, 41, 43, etc.
The objectives of the inventory analysis are:
Comparison of various items of inventory with reported data or data from the previous month and identification of trends;
Identification of the structure of reserves and the reasons for its change;
Comparison of the dynamics of stocks with the dynamics of receivables and payables, as well as revenue;
Determination of possible overstocking and illiquid stocks.
As part of the analysis of revenue, either a VAT declaration (reflects quarterly revenue) or a balance sheet for account 90-1 for a certain period is requested, as well as certificates of revenue in kind. When analyzing revenue, the main attention is paid to:
The structure of revenue by type of product and its comparison with previous periods;
The dynamics of revenue and its comparison with previous periods.
In addition, when researching revenue, it is important to take into account the seasonality, as well as the specifics of the company's production cycle.
It is very important, within the framework of monthly monitoring, to analyze the turnovers in banks for the following reasons:
According to Russian Accounting Standards, revenue is reflected in terms of shipment, therefore, an analysis of turnovers in banks makes it possible to assess the cash flow;
The certificates of the servicing banks should contain information about the presence of a card index of unpaid documents, which makes it possible to identify potential problems of the borrower;
Also, the certificates should contain information about loans issued by banks, which allows you to verify the specified information with accounting data and assess the credit load.
Usually, as part of a study of turnover in banks, the following are requested:
Information from the Inspectorate of the Federal Tax Service on open bank accounts;
Inquiries about turnover, card index and availability of loans, off-balance sheet commitments.
Registration of monitoring results. Working with problem debts
The monitoring results are drawn up in the form of an analytical note, which usually contains the following information:
Borrower's name, type of loan product and transaction parameters;
Borrower's industry, a brief analysis of market and non-market factors;
Conclusions based on the results of vertical and horizontal analysis of the balance sheet and income statement;
Conclusions based on the analysis of liquidity, financial stability, business activity and profitability;
Analysis of sales proceeds;
Analysis of accounts receivable, accounts payable, financial investments, stocks, loans and credits;
Analysis of turnovers in banks;
Analysis of the order book and the borrower's cash flow plan;
Conclusions on the results of monitoring the collateral;
General conclusion about the change in risk for a specific transaction / borrower.
Factors that may indicate the occurrence of potential problems for the borrower:
A sharp decrease in revenue and receipts to settlement accounts;
Increase in inventory and work in progress;
Growth of accounts receivable, growth of overdue debt;
Growth of accounts payable, including overdue;
Loan portfolio growth;
The presence of a filing cabinet for accounts;
Submission of claims to tax authorities;
Filing claims by third parties;
Falling demand for products;
Availability of predicted cash gaps without additional funding, etc.
In the event of a potentially problematic debt, it is necessary:
Conduct negotiations with the borrower, guarantors, loan pledgers;
Understand the causes of potential problems;
Understand the need for loan restructuring;
Find a mutually acceptable restructuring solution.
Basic rules of conduct for a creditor in case of an overdue debt:
Correctness;
Persistence;
Focus on finding a mutually acceptable solution;
Compliance with the law.
In conclusion, it should be noted that credit institutions need to restructure their work in relation to assessing the financial condition of existing borrowers by deepening and increasing the frequency of analysis. The proposed approaches to building a system of in-depth monitoring will help not only to correctly assess the financial condition for the purposes of reservation, but also to immediately respond to the occurrence of financial difficulties from borrowers.
To reduce credit risk, banks carry out an analysis of the borrower's creditworthiness. The concept of creditworthiness is inextricably linked with the essence of credit, one of the main features of which, which distinguishes it from other economic categories, is the return of the value assigned by the lender to the borrower on the basis of payment.
The lender must carefully study the potential borrower, give an assessment of it creditworthiness - the ability of the client to fully and on time pay off his credit obligations (principal and interest). This is a narrower concept than solvency , which assumes the ability of a legal entity or an individual to timely pay off all types of debt that it has. The creditworthiness characterizes the possibility of repayment of only this loan debt.
The boundaries of the analysis of creditworthiness depend on the size and term of the loan, the results of the past activities of the enterprise, its relationship with the bank in the past.
Sources of information when studying a client's creditworthiness are: an interview with an applicant for a loan; own database; external sources; on-site inspection; analysis of financial statements.
On the basis of an interview with the applicant, the bank finds out the reasons for applying for a loan, determines whether the loan application meets the requirements of the bank arising from its credit policy... As a rule, banks, when assessing the creditworthiness of a borrower, form its so-called credit rating based on the study of the following issues;
- - the quality of the firm's management;
- - the general level of development of the industry to which the borrower belongs;
- - the competitive position of the borrower in the industry;
- - the impact of changes in market conditions on the volume of production and sales;
- - the degree of dependence of the firm on individual buyers and suppliers;
- - severity of competition with similar firms;
- - the quality of the products and their assortment;
- - the level of the lender's relationship with his borrowing clients;
- - short-term plans and long-term development prospects of the borrower enterprise;
- - the degree of the borrower's dependence on affiliated persons and independence in decision-making;
- - the borrower's belonging to financial groups and holdings;
- - involvement of the borrower in litigation;
- - the degree of dependence of the borrower on government subsidies;
- - the likelihood of opening in the near future or the actual beginning of the bankruptcy procedure and (or) liquidation of the borrower.
As for the purely accounting information used to assess the creditworthiness of the borrower and included in his credit rating, its completeness depends on the type of client (individual or legal entity), the form of ownership of the legal entity, industry affiliation, the competitiveness of the products and the demand for it from potential buyers, and T.I.
For borrower - legal entity (with the exception of credit institutions) the following reporting forms will be required to be submitted to the bank:
- - annual financial statements in full;
- - published statements for the last three completed financial years;
- - balance sheet for the last reporting period;
- - profit and loss statement as of the last reporting date.
An individual borrower represents:
- - a certificate from the place of work and a certificate of income of an individual certified by the employer;
- - other documents confirming the income of an individual.
- reporting prepared in accordance with International standards financial reporting (IFRS);
- management reporting and other management information;
- budget or business plan for the current fiscal year;
- quarterly report of the issuer of securities on material facts affecting the financial and economic
the activity of the issuer (if the borrower is the issuer of securities);
- cash flow data;
- data on overdue accounts receivable and payable, outstanding loans and borrowings, overdue own bills of the borrower;
- certificates of open settlement (current) accounts with credit institutions;
- certificates that the borrower does not have a card index of unpaid settlement documents for all open settlement (current) accounts, as well as certificates from tax authorities about the absence of debts to the budget of all levels and off-budget funds;
- other information from credit bureaus and collection agencies.
In world and domestic practice, several methods of assessing creditworthiness are used: comparison method; grouping method; structural method; method of financial ratios; method of analyzing the organization's cash flows; business risk analysis method; scoring method, etc.
Comparison method allows you to determine the reasons and the impact of dynamic changes and deviations in items on the liquidity of the bank and the profitability of its operations, to identify reserves for increasing profitability.
Grouping method allows, by systematizing the balance data, to understand the essence of the analyzed phenomena and processes.
Financial ratios method allows you to assess the financial position of the borrower to identify the ability and willingness to repay the requested loan in accordance with the terms of the loan agreement and the pledge agreement. For this, the following ratios are used: liquidity; turnover (business activity); raising funds (indicators of financial leverage); profitability; market (debt service indicators).
In each specific case, the bank must determine the degree of risk that it is willing to take on and the cost of the loan. In addition to calculating credit ratios, commercial banks can make a rating assessment of the borrowing company. The rating score is formed by combining the estimates of individual indicators according to their specific weights. Consider examples of assessing the creditworthiness of a borrower using the coefficient method based on an analysis of the data of its balance sheet.
Example 8.1
Required.
- 1. Determine the current liquidity ratio, compare with the optimal value.
- 2. Determine the absolute liquidity ratio, compare with the optimal value.
- 1. Current liquidity ratio: 345 548: 94 265 = 3.67 (the optimal value is 1-2).
- 2. The ratio of absolute liquidity: 5148: 94 265 = 0.06 (the optimal value is 0.1-0.3).
Example 8.2
The data of the balance sheet of the enterprise are given:
Required.
- 1. Determine the quick liquidity ratio.
- 2. Compare it with international standards.
Quick liquidity ratio: (6515 + 241 325): 340 176 = 0.73 (standard 0.5-0.1). The result obtained is greater than the standard value. It follows that the company has sufficient liquid assets to cover liabilities and timely settlements with debtors.
Cash flow method allows you to predict and analyze cash flow to analyze the real financial condition of the debtor. The essence of this method is to compare cash inflows (profits, depreciation, etc.) and outflows (taxes, dividends, etc.) funds on the accounts of borrowers. For analysis cash flow data are taken for several periods, which makes it possible to identify trends in their change. A constant net cash inflow of a borrower indicates its financial stability, and a short-term one - of an unstable state and a lower level of financial security. If the borrower has a systematic net cash outflow, this allows us to speak of his insolvency. The results of the comparison of cash inflows and outflows should be extrapolated to the life of the loan. This method is less often used in the practice of Russian bikes in comparison with the coefficient method, since it is more labor intensive.
Business risk analysis method allows you to determine the level of acceptable risks while maintaining profitable activities, quality of management and a transparent ownership structure of the borrower. In this case, business risk is understood as the risk of loss from a violation, slowdown or untimely completion of the circulation of the borrower's funds. In practice lending activities this method is rarely used.
Scoring method is associated with the prompt presentation of a loan to the borrower based on the analysis of financial statements but the results of compliance with certain indicators characterizing the degree of financial stability of the debtor according to the methodology developed by the bank.
The use of one method or another in the implementation of the credit process is the prerogative of the bank.
In case of a positive decision but the application of the borrower, the specialist of the credit department prepares a loan agreement (with the attachment to it of the schedule for repayment of the principal debt) and a pledge agreement (with a list and appraisal of the value of assets accepted as collateral for the loan).
Among other things, the borrower submits to the bank a certificate of notification to the tax authority of the taxpayer's intention to open a loan, deposit or other account with a bank or other credit institution. The bank must, no later than five working days after opening the account, send the stub of the certificate to the tax office indicating the number open account... Simultaneously with the signing of the loan agreement and the pledge agreement with the annexes to them, the borrower submits a notice of the right to write off funds from the borrower's account without accent.
Consider the main terms of a bank loan agreement with borrowers. Loan agreement - written agreement between commercial bank and the borrower, according to which the bank undertakes to provide the borrower with a loan in the agreed amount on the terms of urgency, repayment and repayment, and the borrower undertakes to use the received loan for its intended purpose and return it within the prescribed period with payment of the agreed interest.
Commercial banks independently develop forms of loan agreements, but, as a rule, modern loan agreements contain the following sections:
- - general provisions;
- - the rights and obligations of the borrower;
- - the rights and obligations of the bank;
- - responsibility of the parties;
- - settlement of disputes;
- - contract time;
- - legal addresses.
The first section of the loan agreement specifies: the name of the contracting parties; subject of the agreement - the type of loan, its amount, term, interest rate; conditions for securing the fulfillment of loan obligations (pledge, guarantee, surety, insurance of liability for non-repayment of the loan, with the attachment to the loan agreement, respectively, of the pledge agreement, surety agreement, guarantee agreement, insurance agreement); the procedure for issuing and repaying a loan, as well as the procedure for calculating and paying interest on a loan (for urgent and overdue). Some banks distinguish the procedure for calculating and paying interest on a loan, as well as the conditions for securing obligations in separate sections of the loan agreement.
The rights and obligations of the borrower and the lender arise from current legislation, and are also determined by the specifics of each specific credit transaction, the situation in the market of credit resources, the creditworthiness of the borrower. Let's consider a typical view of these sections of a loan agreement.
The borrowing company has the right to:
- - require the bank to provide a loan in the amount and within the time frame stipulated by the agreement;
- - contact the bank with the necessary justifications and calculations to amend the terms of the agreement;
- - to repay the debt on the loan ahead of schedule;
- - terminate the agreement if the bank does not comply with its terms or for its own economic reasons;
- - to demand prolongation of the term of the agreement for objective reasons.
The bank has the right:
- - to check the security of the issued loan, including on the spot (at the borrower), and the intended use of the loan;
- - stop issuing new loans and present for collection previously issued in case of violation by the borrower of the terms of the loan agreement, as well as in the event of cases of inaccurate reporting, neglect in accounting, repeated delays in the payment of interest on a loan;
- - to charge the borrower when prolonging the loan, the appropriate commission fee;
- - to accrue and collect compensation for an unused loan (in case of an official refusal of the borrower from the loan or part of it during the term of the agreement).
The borrower undertakes-.
- - use the issued loan for the purposes stipulated in the agreement;
- - return the loan provided within the period specified in the agreement;
- - to pay the bank interest for the use of the loan in a timely manner;
- - timely submit the balance sheet and other documents required by the bank to exercise control over the loan;
- - to ensure the reliability of the data submitted to the bank for obtaining a loan and subsequent control over its use;
- - provide the lender with access to the primary reporting and accounting documents but his request on issues related to the issued loan;
- - provide the lender with information about all loans received and planned to be received from third parties;
- - inform the bank in advance about the upcoming change in the organizational and legal form or other reorganization;
- - in case of reorganization or liquidation, immediately repay the loan debt with full payment of interest, regardless of the contractual loan repayment period.
Obligations of the bank under the loan agreement are as follows:
- - provide a loan to the borrower in the amount and within the terms provided for in the contract;
- - inform the borrower about the facts and reasons for the early collection of the loan by the bank;
- - on a monthly basis, up to the _ date, accrue interest on the loan provided to the client-borrower;
- - inform the borrower about changes in regulatory documents on issues of lending and settlements made by the decision of the Bank of Russia, authorities and management.
- - For violation of the terms of the loan agreement, it is envisaged responsibility of the parties , including property. Thus, a bank for a violation by the borrower of its obligations may suspend further loan issuance, present it for early collection, reduce the amount of loan provided for issuance under the agreement, increase the interest rate on it, etc. The borrower may demand from the bank compensation for losses incurred due to the failure to provide him at all or to provide him in an incomplete amount of the loan provided for under the agreement (in the amount of no more than the penalty paid by the enterprise to its counterparties under business agreements). At the same time, the borrower himself, in case of incomplete use of the loan allocated to him by the bank, pays to the latter a penalty in the amount of the bank's payment for the attracted credit resources and the lost margin in the reporting period. It should be borne in mind that the inevitability and inevitability of punishment for non-fulfillment of obligations assumed under the contract does not mean that the subjects of credit relations are not entitled to all kinds of mutual benefits and incentives under the terms of 100 fulfillment.
As additional conditions the loan agreement may be subject to the bank's claims against the borrower, in particular:
- - do not lend without consent until repayment of the loan under this agreement;
- - not to act as a guarantor for the obligations of third parties, as well as an endorser or surety;
- - not to sell or transfer to any form of ownership of their assets, as well as to transfer them as collateral as collateral for loans from other creditors;
avoid mergers or consolidations with other businesses.
In the course of this work, the bank implements the market conditions management the right to choose the subject of a credit transaction, in accordance with their economic interests, as well as their ability to provide a loan to borrowers in the amounts required by them based on the available credit resources, the possibilities of increasing them through their deposit and interest rate policies, attracting interbank loans, refinancing in Bank of Russia, etc.
An analysis of the study of the forms of ensuring the repayment of the loan value is of great importance for banking practice. The main forms of security are pledge, guarantee, surety, insurance policy.
Pledge agreement ... Pledge of property (movable and immovable) means that the creditor-pledgee has the right to sell this property if the obligation secured by the pledge is not fulfilled. By virtue of the pledge, the creditor has the right, in the event of default by the pledgor-debtor of the obligation secured by the pledge, to receive satisfaction from the value of the pledged property primarily to other creditors. The pledge must ensure not only the return of the loan, but also the payment of the corresponding interest and penalties under the contract, provided for in the event of its failure. In addition, it should be borne in mind that the market value of the pledged property may decrease. Consequently, in all cases the value of the collateral must be higher than the amount of the loan requested.
For rate security of collateral use, for example, the following criteria:
- - the ratio of the value of the mortgaged property and the amount of the loan provided;
- - liquidity of the pledged property;
- - the ability of the bike to control the pledged property.
According to these criteria, groups of collateral are allocated and a rating of the borrower's reliability is established.
Guarantee agreement. Under this agreement, the guarantor is obliged to the creditor of another person (borrower, debtor) to be responsible for the latter's fulfillment of his obligation. The surety creates for the creditor a greater likelihood of real satisfaction of his claim against the debtor, since the surety is liable to him for non-performance of the obligation along with the debtor. The borrower and the guarantor are liable to the lender as joint debtors. The surety agreement is concluded in writing and must be notarized. The surety agreement concluded between the creditor bank of the debtor and his guarantor specifies the name and address of the debtor, the guarantor and the creditor bank, the amount of payment, the terms and conditions for its payment, the procedure for settlements between the guarantor and the bank, etc. obligations, as well as if the creditor, within three months from the date of maturity of the obligation, does not bring a claim against the surety. In the event that such a claim is filed but the guarantor fulfills the obligation, the creditor (bank) is obliged to serve him documents certifying the claim against the debtor and transfer the rights securing this claim.
Warranty - this is a special type of surety agreement used to secure an obligation only between legal entities, in which the guarantor is responsible subsidiary character. The guarantor for the loan may be a superior organization (ministry, department, association, association), the lessor, the founder and any other organization, including banks, in relation to the debtor. The only condition in this case is the stability of the financial position of the guarantor himself. The warranty is issued guarantee letter , which is presented to the lending institution of the bank. The letter specifies the name of the guarantor and the borrowing organization, the name of the banks serving them, the type of loan and its repayment period, the amount of the guarantee and its deadline. If the borrower does not have funds on the current account to repay the loan, the bank makes a claim to repay the loan to the guarantor. The guarantee is terminated on the same basis as the surety.
Russian banks use insurance of liability of borrowers for non-repayment of the loan. In accordance with the procedure established by the state insurance authorities, the borrower concludes with the insurer insurance contract, which stipulates that in case of non-repayment of the loan within the established time frame, the insurer pays to the bank that issued the loan, compensation in the amount of 50 to 90% of the loan amount not repaid by the borrower, including interest for using the loan. The specific amount of liability is stipulated in the insurance contract, and the insurer is liable if the borrower does not return the loan to the bike within 20 days after the due date stipulated by the loan agreement. In this case, the insurer is obliged to pay the bank that issued the loan, insurance compensation within 15 days after the onset of the claim.
After payment of the insurance compensation to the bank, the insurer transfers, within the limits of the amount paid, all the rights of the creditor bank to the borrower under the loan agreement. The insurer has the right to refuse to pay the insurance indemnity if the policyholder: has provided inaccurate information about the circumstances that are essential for judging the insurance risk; did not fulfill the obligations imposed on him by the terms of insurance.
For policyholders (borrowing companies), operations on insurance of liability of non-repayment of a loan are paid: they must, within a certain time frame established by the insurance contract, make a lump sum of insurance payments. The amount of the insurance premium is determined on the basis of the amount of the loan to be repaid, agreed within the limits of the insurer's responsibility and the rate of insurance premiums for this type of insurance. Rates are set as a percentage of the insured amount differentially depending on the period during which the borrower uses bank loan... Based on the degree of risk in each specific case, when establishing the rate of insurance payments, it is possible to use decreasing (from 0.2 to 1.0) and increasing (from 1.0 to 5.0) coefficients.
In addition to the specified basic forms of securing the loan repayment, other forms can also be used, for example, assignment (cession) in favor of the borrower's claims and accounts to a third party; a guarantee of another bank (including a foreign one), a guarantee of federal and local authorities or a solvent enterprise (Table 8.1).
Table 8.1
Loan security requirements
Security |
The amount of the loan and interest (in% of the assessment of the collateral) |
|
1. 100% guarantee of a first-class foreign bank or a guarantee of another person, confirmed by a first-class foreign bank; security deposit in foreign bank equal to 100% of the amount of the loan and interest |
100% guarantee or deposit |
|
2. 100% guarantee of a domestic bank classified as reliable, within the limit of interbank lending; security deposit in hard currency in a domestic bank, equal to 100% of the loan amount and interest |
100% guarantee or deposit |
|
3.100% -nos provision by state securities with high liquidity (according to the opinion of the bank's experts) |
Up to 90% of the current quote |
|
4. 100% security in the form of highly liquid goods in a controlled warehouse and only if there are sales guarantees in case of non-payment, issued by a trading or other company that has established itself as a partner of the bank |
||
5. Guarantees of organizations, confirmed by the banks specified in clause 2 |
From 50 to 70% of the face value of the guarantee within the limit set for a particular bank |
|
6. Provision of real estate with a guarantee of its implementation in case of non-payment received from known to the bank realtor |
50 to 70% of the appraised value |
|
7. Providing liquid shares (but to the opinion of the bank's experts) |
Up to 50% of the appraised value |
|
8. Any security listed in n. 4 without guarantees of sale in case of non-payment |
Up to 50% of the appraised value |
|
9. Rights under concluded contracts for the sale of highly liquid products (including for export) |
Up to 50% of the payment amount when paying by letter of credit to the bank account |
|
10. Guarantees of federal and local authorities; guarantees of organizations with known solvency, confirmed by banks not related to those specified in and. 2 |
Up to 50% market value based on expert estimates |
|
11. Providing liquid real estate or fixed assets without guarantees in case of non-payment |
Up to 30% of the appraised value |
|
12. Guarantees federal bodies unbanked authorities |
Up to 30% of the appraised value |
|
13. Irreducible balances of goods (including liquid finished products and raw materials) in the borrower's warehouse under the control of the bank |
Up to 50% of the appraised value |
|
14. Provision of low-liquid real estate, low-liquid goods and production stocks, other property that cannot be sold on the basis of known standard conditions; guarantees of organizations with unknown solvency, not confirmed by banks |
Generally not accepted |
|
The nature of the loan collateral also plays a role in determining interest rate level , subject to collection from the enterprise for using a bank loan. The higher the risk of providing a loan (depending on the quality of collateral), the more expensive it is.
After joint adjustment and signing of the loan agreement by the client and the bank, it is submitted for consideration by lawyers.
Loan issue is carried out in accordance with the Regulation of the Bank of Russia dated August 31, 1998 No. 54-P "On the procedure for the provision (placement) of funds by credit institutions and their return (repayment)" (hereinafter referred to as the Regulation of Bike of Russia No. 54-P). In accordance with this document, the bank can provide a loan in the following order:
- - for legal entities - only in cashless form by crediting funds to the current account of the borrower;
- - to individuals by bank transfer to the account of an individual in this bank or in cash through the bank's cash desk;
- - loans in foreign currency are issued to both legal entities and individuals only in non-cash form.
According to Bank of Russia Regulation No. 54-P, loans can be issued by the bank in various ways:
- - one-time (one-time) crediting of funds to the client's bank account or by issuing cash to the borrower - an individual (one-time loan);
- - opening a line of credit , i.e. the conclusion of an agreement on the basis of which the borrower acquires the right to receive and use the funds within a specified period, subject to one of the following conditions: the total amount of funds provided to the borrower does not exceed the maximum amount (limit) specified in the agreement ("issue limit"); during the term of the agreement, the amount of the borrower's lump-sum debt does not exceed the limit established by this agreement (the "debt limit"). Bank of Russia Regulation No. 54-P stipulates that the bank has the right to limit the amount of funds provided under the credit line by simultaneously including both conditions ("issue limit" and "debt limit") in the agreement, as well as using any other additional conditions. The conditions and procedure for opening a credit line are determined by the parties either in a special general (framework) agreement, or in an ordinary agreement;
- - based on overdraft , i.e. lending by the bank to the borrower's account (in case of insufficient or lack of funds on it) and payment of settlement documents from the borrower's account, if the specified operation is provided for by the terms of the bank account agreement or the deposit (deposit) agreement for an individual. The overdraft agreement must establish a limit (i.e., the maximum amount for which the transaction can be performed) and the period during which the borrower's arising credit obligations must be repaid;
- - transfer of the loan amount to the client's card account (by issuing a credit card, which is associated with the opening of a credit line at a bank and allows the client to use a loan when purchasing goods in excess of the funds available on his account and receiving cash loans);
- - through the participation of the bank in providing a loan on a syndicated (consortium) basis. In the Bank of Russia Instruction No. 110-I, it is noted that syndicated or similar loans are loans issued by the bank, provided that the bank concludes a loan agreement with a third party, in which it is determined that the specified third party undertakes to provide the bank with funds: a) no later than the end of the operating day, during which the bank is obliged to provide the borrower with funds in accordance with the terms of the loan agreement in an amount equal to or less than the amount provided by the bank to the borrower on that day; 6) in an amount equal to or less than the amount of the principal debt under the agreement of the bank with the borrower, from the date of entry into force of the agreement between the bank and the borrower on the provision of a loan to the borrower; c) the agreement between the bank and the third party must also contain the condition that the third party has the right to demand payments on the principal debt, interest and other payments of the borrower on the loan not earlier than the moment of actual implementation of the corresponding payments.
The issuance of a loan is carried out from the loan account of the borrower by making accounting entries on the basis of the corresponding payment orders to the details of the recipients. Simultaneously on total amount payments, the borrower issues an Urgent Commitment, which will be passed along with the instructions to the Bank's back office. On the same operational day, a specialist of the operational department comes in one hundred on off-balance sheet account No. 9921 "Liabilities on short-term loans", writing an Income-expense off-balance sheet order. At the end of the operating day, he fills in the receipt part of the "Consolidated Card" f. No. 048707 on off-balance sheet account for the total income.
After signing the loan agreement, the pledger (in this case, the borrower) submits an extract from the book of pledges on the pledged property. The borrower must also submit documents (commodity and administrative documents, invoices, etc.), indicating the intended use of the loan received.
Bank control over the use and repayment of the loan lies in the fact that the borrower is required to fulfill obligations for the timely repayment of bank loans. On a monthly basis (at a certain date agreed with the borrower), the credit department of the bank calculates interest for the use of the loan. The statements with accrued interest on borrowers are submitted by the economists of the back office for execution. If funds are available on the settlement accounts of the borrowers, by the last working day of the month, the funds are debited against the bank's income by a memorial order. Upon maturity according to the loan repayment schedule and the availability of funds in the client's current account, the economist of the operations department issues a memorial order and debits the client's current account. Upon final repayment at the end of the business day, off-balance sheet account No. 9921 is written off as an expense. The borrower can repay the loan with his payment order.
In case of untimely repayment of the loan amount, the bank, but in agreement with the borrower, can make prolongation of a loan and interest on it. If the borrower does not have the funds to return the principal and interest on it and the loan is declared unrecoverable in court, the bank has the right to write it off at the expense of the reserve for possible loan losses. In this case, the amount of the principal debt on the loan and the amount of interest will be credited to special off-balance sheet accounts of overdue loans and overdue interests and will be in these accounts for five years until their possible repayment in the future. If the borrowers are declared insolvent (bankrupt), then depending on the condition of the debtor, the creditor bank has the right to apply to arbitration court either on the appointment of external management of the debtor's property, or on its reorganization, or on the application of liquidation procedures to the debtor.
Interest calculation for the use of a loan we will consider on conditional examples.
Example 8.3
The bank issued a loan in the amount of 7 million rubles. for 2 years at an annual compound interest rate of 15% per annum. The loan must be repaid in a lump sum with interest at the end of the term.
Required.
Determine the accrued amount of debt; the amount of interest received by the bank.
Accumulated amount of debt: 7 million rubles. (1 + 0.15) (1 + 0.15) = 9.2575 million rubles. Amount of interest received: 9.2575 - 7 = 2.2575 million rubles.
Example 8.4
The borrower takes out a loan in the amount of 300,000 rubles. for a period of 5 months. After 5 months, the borrower repays the loan and pays 1,500 rubles. percent but her. Determine the annual interest rate on the loan (NS%).
Interest amount: 1,500 - 300,000 (NS% 5): 12 =125 000 NS%.
Interest rate: X% = 1500: 125,000 = 0.012, or 1.2%.
Example 8.5
The bank issued a loan to the first borrower in the amount of 150,000 rubles. for a period of 2 months at a rate of 14% per annum and the second borrower - in the amount of 300,000 rubles. for a period of 3 months at a rate of 16% per annum. Determine the amount of interest received by the bank on loans granted.
Interest amount: 150,000 (0.14 2): 12 + 300,000 (0.16 3): 12 = = 15,500 rubles.
Example 8.6
The bank issued a loan in the amount of RUB 500,000. pa half a year at a simple interest rate of 15% per annum.
Required.
Determine: amount to be repaid: the amount of interest on the loan. Solution.
Loan amount: 500,000 (1 + 0.15 -6: 12) = 537,500 rubles.
Interest amount: 537,500 - 500,000 = 37,500 rubles.
Example 8.7
The young family received a loan from the bank for the construction of housing in the amount of 12 million rubles. for a period of 3 years at a simple interest rate of 20% per annum.
Required.
Determine: the amount of interest for using the loan; the increased loan amount.
The amount of interest for the loan: 12,000,000 (20: 100 3) = 7,200,000 rubles. Accrued loan amount: 12,000,000 + 7,200,000 = 19,200,000 rubles.
After issuing a loan, the bank must conduct active work on monitoring the execution of the terms of the agreement by the borrower:
- - control the intended use of the loan;
- - evaluate the financial condition of the borrower and his creditworthiness;
- - on a quarterly or even monthly basis (for high-risk loans) to check the safety of the pledged property, compliance with the collateral margin;
- - monitor the timely receipt of interest on the loan and the receipt of payments from the borrower in accordance with the loan repayment schedule;
- - monthly adjust, if necessary, the provision for possible losses on loans when the quality of collateral and the degree of risk of the loan change;
- - conduct business correspondence with the client and, if necessary, hold business meetings;
- - regularly analyze the loan portfolio.
If the borrower violates the terms of the loan agreement, the bank may suspend the further issuance of the loan provided for by the agreement, present the remaining part of the debt for collection in case of non-payment of the next installment or the threat of non-repayment of the loan, demand early repayment of all loans provided. Note that the application of these measures must be stipulated in the loan agreement.
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