Credit risk analysis at the level of an operative branch of the bank
Credit risk is most simply defined as the potential that a borrower/counter party will fail to meet its obligations in accordance with agreed terms. The goal of credit risk management is to maintain credit risk exposure within targeted limits so that the bank can maximize risk adjusted return. In such cases, the account of the customer inevitably becomes overdue, the granted loan turns into a non-performing credit and the lending bank registers a decline of its profit. In order to prevent such situations, commercial banks must take certain measures of reducing credit risk. In order to assess the exposure to credit risk, we can operate with a system of indicators based on information obtained from financial statements. The paper presents how the exposure to this type of risk can be evaluated at the level of an operative branch of the bank.
Volume (Year): 13 (2010)
Issue (Month): 2 (December)
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