Bank Lending Assessment and Management

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What is the purpose of lending assessment?

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To determine the creditworthiness of a potential borrower and the level of risk associated with extending credit.

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What factors are considered in lending assessment?

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1. Financial History 2. Income and Employment 3. Assets and Liabilities 4. Collateral

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What does financial history include in lending assessment?

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Examining the borrower's past credit performance, including payment history and defaults.

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How does income and employment affect lending assessment?

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It assesses the borrower's ability to make loan payments based on income and job stability.

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What is evaluated in assets and liabilities during lending assessment?

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The borrower's net worth and debt obligations.

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What is collateral in the context of lending?

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The value and security of any assets pledged as collateral for the loan.

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What are the Five Cs of Credit?

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1. Capacity (ability to repay) 2. Capital (assets) 3. Conditions (economic environment) 4. Character (reputation) 5. Collateral

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What is credit scoring?

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Using algorithms and statistical models to predict the likelihood of default.

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What does financial statement analysis involve?

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Examining the borrower's financial statements to assess their financial health.

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What is due diligence in lending?

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Conducting thorough research and verification of information provided by the borrower.