The impact of quality of loans on the performance of banks
The management of credit risk entails the necessity of the analysis of the way the quality of the credit portfolio evolves in time. The rating of the quality of assets reflects the potential risk of loans, of investment and of other assets, as well as of the off-balance sheet transactions. The evaluation of the quality of assets must be also analyzed depending on their level of provisions, also it is necessary to consider all other risks that can affect the capitalization of the assets of the bank, including the operational, market, reputation and strategy risks.
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