ESSENTIALS OF BANK CREDIT (BF/2024/BOAZ /03)

Bank Credit is the ability of a customer (business, company, Individual etc.) to borrow a specified amount from the bank, whereas loan is the actual amount borrowed on which interest is being paid. Despite the line of difference, the two terms are commonly used interchangeably.

The principal function of a bank is lending i.e. granting credit/loan thereby creating risk asset (Loan Portfolio) which earns the bank the bulk of its revenue in form of interest income. However, this significant activity of a bank has inherent risk (credit risk) which is the bane of most lenders. The credit risk should be properly managed to assure sustainability of the bank.

To manage inherent risk of credit process, credit analysis must be thoroughly undertaken.

Credit Analysis is the process through which a bank calculates credit worthiness of its loan applicant. It is an evaluation of the ability of a loan customer to honor its financial obligation to the bank. The goal of a credit analyst therefore is to make a judgment about an obligor’s ability and willingness to pay back the loan he is granted and fulfill all the terms attached thereto. This task is herculean and calls for expertise and dexterity.

This five-day interactive training was designed to build the capacity of the delegates in credit analysis and loan administration with a view to minimizing loss of value.

TRAINING OBJECTIVES

At the end of the training, participants should be able to:

• Demonstrate knowledge of Financial Analysis.
• Evaluate Credit proposal
• Undertake Financial Statement and Analysis
• Acquire knowledge in Project Financing
• Take appropriate collateral to secure lending
• Prepare letter of credit
• Calculate working capital cycle