What is loan risk evaluation Loan risk evaluation is the

Loan Risk Rating

There are generally 5 types of loan risk classifications, which are:

1. Normal Loan. This classification means that the borrower has been able to repay the loan on time without being late;

2. Loans of concern. This classification refers to the borrower can repay the loan, but there are some factors that will affect the borrower's normal repayment;

3, subprime loans. This classification refers to the borrower has obvious repayment problems, the borrower needs to apply for collateral or guarantee to solve;

4, doubtful loans. This classification refers to the borrower has been unable to repay on time, even with collateral or guarantee the bank will have some losses;

5, loss loans. This classification refers to the bank has no way to recover the loan funds, will produce a large loss.

Early classification

Before 1998, China's commercial banks loan classification is basically along the lines of the Ministry of Finance in 1993 promulgated the "financial system of financial and insurance enterprises," the provisions of the loan is divided into normal, overdue, sluggish, doubtful four types, the latter three together known as non-performing loans in China referred to as "one overdue and two dull The latter three are collectively known as non-performing loans, referred to in China as "one overdue and two bad". Overdue loans refer to overdue loans, as long as more than one day is overdue; sluggish refers to overdue for two years or less than two years, but the operation of the loan stops, the project is dismantled; doubtful loans refers to the Ministry of Finance in accordance with the relevant provisions of the determination has been unable to recover, need to write off the allowance for doubtful accounts of the loan. Most of the doubtful loans of Chinese commercial banks have formed historical problems that should be written off but have not been written off.

This categorization method is simple and easy to implement, and it did play an important role in the enterprise system and financial system at that time, but with the gradual deepening of the economic reform, the drawbacks of this method are gradually revealed, and it can't be adapted to the needs of the economic development and financial reform. For example, loans that are not due, whether or not there is in fact a problem, are regarded as normal, it is clear that the standard is not clear, and then, for example, one day overdue loans that are categorized as non-performing loans seems to be too strict. In addition, this method is an ex post facto management approach, and only if the loan term is exceeded will it show up as a non-performing loan in the bank's books. Therefore, it is useful for improving the quality of bank loans. There is often little that can be done to take some protection against problem loans in advance. So with the prominence of the problem of non-performing loans, this type of categorization method has come to the point where it must be changed.

What aspects of the borrower should be analyzed as the basis for loan risk evaluation?

According to the relevant provisions of the CBRC's Interim Measures for the Administration of Personal Loans, the risk evaluation of personal loans should be based on analyzing the borrower's cash inflow, repayment ability and repayment willingness, and adopting both qualitative and quantitative analytical methods to comprehensively and dynamically carry out loan review and risk assessment. Loan review is a further review made by commercial banks on the basis of pre-lending investigation regarding the purpose, use and reasonableness of business borrowing. There are three main points: ① Determination of facts. That is, the approver of the enterprise and creditors to provide the reasons for the loan and the use of the review, the correct determination of its nature. ② grasp the policy. Mainly based on the facts found, according to the state and the higher banks to determine the credit policy, and ultimately determine the loan or not, loan more or less. ③ Determine the loan. Mainly to determine the amount of the loan, repayment period, interest rates and loan methods.

1. Loan risk is usually to the lender. Examined from the lender's point of view, loan risk refers to the possibility of the occurrence of various losses faced by the lender in the course of operating the loan business. Loan risk is measurable, loan risk is measurable, can be measured by a comprehensive examination of a number of factors, before or after the loan disbursement, the probability of recovering the loan principal and interest on schedule. The so-called loan risk degree is a measure of the size of the degree of loan risk, loan risk degree is a specific quantitative indicators can be measured, it is usually greater than zero less than 1, the greater the degree of loan risk, indicating that the loan principal and interest recovered on schedule the smaller the possibility of the opposite, the smaller the degree of loan risk, indicating that the loan principal and interest recovered on schedule the greater the likelihood of the loan principal and interest.

2. There is also a difference between loan risk and risky loans. Often said risky loans actually has two meanings: one is to refer to non-performing loans, that is, abnormal loans or problematic loans, the recovery of loan principal and interest has been difficult or even impossible to recover; the other is to refer to high-risk loans, such as scientific and technological loans, the recovery of this kind of loan principal and interest uncertainty is very large, the lender in the loan risk at the same time, it is possible to obtain a greater return. Loan risk and credit risk are two concepts that are both related and different. Credit risk exists in all credit activities, not only bank credit has credit risk, national credit, commercial credit, consumer credit and private credit have credit risk, for the lender, the loan risk is the most important credit risk, but the loan risk in addition to credit risk, there are interest rate risk, liquidity risk, inflation risk and so on. Failure to repay a loan means that a commercial bank is unable to recover or can only recover a very small portion of the principal and interest after all possible legal measures and all necessary legal procedures have been taken after the loan amount has been disbursed. Can not repay the loan is mostly due to the relationship between the loan or governmental directive allocation or the staff of illegal lending caused by the most serious non-performing loans, often the bank's money is destined for loans when the allocation of bad debts should be resolutely to be resolved.

How to assess credit risk

Pre-credit risk management is the core of banking business. At present, the proportion of non-performing assets of China's commercial banks is generally high, and credit risk is the main financial risk faced by China's commercial banks. Next, please enjoy I give you a network collection of how to assess credit risk.

Methods of credit risk assessment

First, the current situation of credit assets in China's commercial banks

Credit assets are mainly various types of loans, bank non-performing credit assets is the bank to put credit after the formation of credit assets do not comply with the principle of safety, liquidity and profitability, in the overdue, stagnant, bad debt (or according to the five categories of the classification of subprime, doubtful, loss category loans) The portion of loans that are in a state that increases the risk of bank assets and faces capital losses. In essence, non-performing credit assets are real or potential credit assets that do not guarantee the safe recovery of the principal and interest of the funds lent.

From a general point of view, China's state-owned commercial banks credit asset quality into the "three high, three poor" features: First, the ratio of non-performing assets is high, the quality of credit assets. Wholly state-owned commercial banks divested nearly 1.4 trillion in non-performing assets, non-performing loans fell nearly 10 percentage points. As of the end of January 2001, according to the "one over two dull" caliber calculation, the non-performing loan ratio is still as high as 25.37%. According to the five-level categorization of non-performing loans is even higher, far higher than the national warning line of 10% and the People's Bank of China's regulatory standard of 15%. At the same time, the structure of non-performing loans in a serious form, the highest proportion of non-performing loans. According to the estimation of the relevant departments, the actual formation of losses of non-performing loans accounted for about more than 7% of all non-performing loans. Double-dull loans accounted for more than 80% of non-performing loans, and doubtful and loss categories accounted for about 70% of all non-performing loans. Secondly, the long-term occupancy rate of credit assets is high and the liquidity of credit assets is poor. Loans are heavily invested in fixed asset loans, real estate development loans, housing mortgage loans and other long-term loans; a large number of loans are used by enterprises as capital, most of the working capital loans are occupied by enterprises for a long time, which is transformed into bottoming liquidity, and some of the promissory notes are unable to be cashed at maturity to form advances that are forced to be transferred to other loans. Third, the high cost of financing credit funds, poor profitability. Although the bank's comprehensive interest rate has been reduced in recent years, but after several interest rate cuts, the deposit and loan spreads are shrinking, and the rate of return on capital is actually declining.

Second, China's commercial banks credit risk analysis

China's commercial banks credit risk is high, to the existence of a large number of non-performing assets is due to a variety of reasons, both the inherent causes of the banking system itself, but also historical and institutional reasons; both the reasons for the credit mechanism of the community, but also the reasons for the operation of banks and business operations; both the causes of the domestic environment, but also the reasons of the international environment. This is the first time that I've seen a lot of people in the world who have been in the same situation.

(a) External factors

1, the government's administrative intervention in the bank credit risk accumulation

In the period of professional banks, state-owned banks as a tool for macro-control of the national economy, do not aim at profitability, according to the plan of the issuance of loans in support of state-owned enterprise reform and local economic development as the goal. With the introduction of the commercial bank law, the government intervention in bank credit work has improved, but in some places or at some time, this phenomenon is still relatively common, the government's intervention led to the distortion of the behavior of state-owned commercial banks, so that the security and liquidity of the bank's funds are not properly safeguarded.

2, the adjustment of the national macroeconomic structure and the impact of changes in the international economic situation

In the context of global economic integration, in order to further enhance China's comprehensive national strength, our country from the "Ninth Five-Year Plan" period began to adjust the industrial structure, and the pace of accession to the WTO to speed up! In this transformation process, sunrise and sunset industries are inevitably formed. Some industries thus get rapid development, while some industries are gradually shrinking, shut down, stop, merge and turn the result of the loss of solvency of enterprises, the formation of a large number of non-performing loans, so that the commercial banks credit risks continue to accumulate. Therefore, for China in the transition, the policy risk is still an important risk faced by commercial banks.

In addition, with the acceleration of international capital flows, the dissemination of information across borders and the application of electronic network technology, the integration of the global economy and the international financial markets continue to strengthen each other's influence, while promoting the development of the world economy, the economic turmoil and the financial crisis will be in the world linkage, the spread of the trend. At the same time, the financial market and the scale of international capital flows continue to expand, speculative capital flows increase the risk of developing countries to integrate into the process of economic globalization. This also likewise increases the credit risk of China's commercial banks.

3, poor business

Businesses and banks are "all for the better, all for the worse" relationship, according to a survey by the American Bankers Association: more than 70-90% of the problem loans are due to business reasons. For domestic enterprises, this is reflected in more obvious, especially the enterprise management behavior is directly related to the safety of bank assets, mainly manifested as follows: First, the enterprise internal governance structure is not perfect, weak internal control management, financial management ability is low, indirectly increase the bank credit risk; Second, the management is not stable, so that the bank's relationship with the enterprise from time to time to have a big change, which directly affects the repayment of the loan; Third, with the new system and organization of the enterprise, the bank has to pay back the loan to the enterprise. Third, with the establishment of new systems and organizational forms of enterprises, enterprises use equity splits, transfers, mergers, mergers and acquisitions, joint ventures and restructuring to evade bank debt.

4, the financial system is not sound and the lack of social credit

Inadequate financial system is not only an important factor in inducing financial risks, but also not conducive to the deepening of the reform of commercial banks and operational efficiency, and ultimately not conducive to the banks to effectively guard against credit risk, the formation of a vicious circle. At present, the most prominent is the problem of interest rate control. China is currently implementing a strict interest rate control policy, opened up some foreign currency deposit and loan interest rates in 2000, RMB deposit and loan interest rates are still not marketized. Interest rate restrictions have increased the burden of China's commercial banks, so that commercial banks are not free to adjust their assets and liabilities position according to market interest rates, and are unable to introduce products that meet market needs, so that the risk of assets and returns can not be reasonably matched.

The lack of social credit to the bank credit assets constitute a moral hazard, China's social credit system is not yet fully cultivated some enterprises consistent with a certain region of the serious idea of reneging on the debt, some enterprises wantonly squeezed the misappropriation of bank loans, the enterprises owed each other a lot of the formation of difficult to unravel the chain of debt, can not return to the funds to repay the bank loans. These circumstances constitute a serious moral hazard to bank credit assets.

(B) internal factors

1, the management level is not high

With the steady progress of commercialization reform, state-owned commercial banks intensive management awareness is increasing, the initial establishment of a more perfect credit management system, the level of management has improved. However, from the perspective of risk management, there are still significant deficiencies, mainly: (1) inaccurate positioning of risk management; (2) lack of risk early warning mechanism; (3) unscientific risk analysis tools.

2, management system and business mechanism is not perfect

From the institutional system, the internal risk control system, loan review system is weak, security, liquidity, profitability of the operating principles are difficult to implement in place. From the point of view of the management system, the organizational structure is unreasonable, fragmented, many links, responsibilities and powers are not clear, and failed to form a mechanism for the **** management; the degree of comprehensive coordination of various risk management is not high, and it is difficult to measure and grasp the risk situation in general; the lack of independent risk monitoring procedures, resulting in the management, decision-making can not grasp the credit situation in a timely, comprehensive and accurate. From the point of view of the operating mechanism, the decision-making mechanism is not sound, the lack of effective constraints on business decision-making; credit personnel's responsibilities, rights and benefits are not unified, incentives and constraints are not sufficiently monetized, the security of the loan is not linked to personal interests; in addition, there is no real relative independence of the risk management department.

3, the overall level of staff quality is not high

State-owned commercial banks have failed to establish a professional risk management team, risk management personnel quality is not high, more satisfied with the daily report statistics; credit management personnel knowledge structure aging, on the market risk, credit risk is not allowed to grasp, can not adapt to the new situation of risk management requirements.

The main risks of credit risk and countermeasures

First, the operational risk

1) The concept of operational risk: the realization of the commitment to enter the market makes China's financial market opening up to the outside world continues to increase, the local commercial banks are faced with a more intense competition, which puts forward a higher demand for risk management of commercial banks, but based on the lack of property rights of local commercial banks, the lack of internal control mechanisms, improper process design and other factors. However, based on the lack of property rights, internal control mechanisms, the lack of process design and other factors caused by the operational risk of local commercial banks has become increasingly prominent.

According to the definition given by the Basel Committee in paragraph 1 of the Accord, operational risk is the risk of loss caused by inadequate or faulty internal processes, people and systems, or by external events.

Operational risk can be subdivided into two categories based on the causes of the risk: one is the risk of operational failure or error, including personnel risk, process risk, and technology risk, and the other is the risk of operational strategy, which refers to the risk of loss due to the adoption of an inappropriate strategy in response to external events or external environments, such as political, tax, regulatory, governmental, social, and market competition, etc. The former is mainly related to the efficiency of internal control or the risk of loss. The former is mainly related to internal control efficiency or management quality, also known as internal risk the latter is mainly related to external events, also known as external events or external dependence risk.

2) Operational Risk Management Countermeasures and Suggestions

Methods to address operational risk, according to the new agreement, are mainly three kinds of basic pointers, standardized methods and internal modeling methods, the core of which is the allocation of capital based on different risk weights. However, for Chinese commercial banks, due to the difficulty of collecting data on personal housing credit operational risk and the still short period of time for business development, it is basically impossible to use the statistical method and information simulation, and the unpredictability of operational risk is particularly prominent in China, so a more realistic approach is to focus on the prevention of operational risk in the following four areas:

1 Strengthen the management of the process

1 Existing process Check and sort out the existing processes to eliminate possible loopholes. Although all Chinese commercial banks have regulatory departments and risk management departments, there is no specific operational risk management department, let alone an operational risk management department for personal housing credit. There are more loopholes in the borrowing contract and borrowing process, which will seriously affect the development of the business if not corrected early.

2 The newly developed products are carefully analyzed and market researched to avoid blind investment, ineffective investment and high-risk investment. Individual housing credit business product updates gradually accelerated, the various behavior in order to seize the market share, in the repayment method, the guarantee method, the way to handle many aspects of a large number of innovations, but these innovations are whether the full market research and rigorous review of the operational risk, it is worth doubting. It is understood that China's commercial banks rarely conduct accurate data analysis and forecasting before launching a new personal housing credit product, and they live to make subjective judgments based on experience and leadership, both because the database has not yet been established and because China's commercial banks pay little attention to market research. Establishment and Improvement of Emergency Means. The loopholes and risks detected by inspection should be avoided and corrected by reasonable means, avoiding the use of over-emergency means and overbearing clauses to deal with them. Chinese commercial banks have not done enough on this point, especially on the treatment of early repayment, the bank, after understanding the possible loss caused by early repayment, adopted the measures of immediately adding default fees and restricting early repayment, which caused strong repercussions from the society because there is no corresponding provision in the loan contract.

Click on the next page there are more How to assess credit risk

What is credit risk

In recent years, in the new situation of increasing globalization of the financial industry, the credit risk has become one of the most important risks faced by the bank, the bank's ability to control and manage credit risk has a relationship with the stability of the banking system and the development of the national economy. I have organized some credit risk is what, interested pro can come to read!

What is credit risk

The formation of credit risk is a gradual process from germination, accumulation until the occurrence. Before the expiration of the repayment period, the borrower's financial and business conditions of the major adverse changes are likely to affect its ability to perform, the lender in addition to agreeing to a general default provisions, the establishment of security and other ways to ensure that the claim is paid on time, but also in the contract agreed to the "cross-default provisions". The basic meaning of cross-default is: if the debtor under this contract in other loan contract default, it is also regarded as the default of this contract. Generally speaking, the creditor is the party has not fulfilled its obligations under this contract for the reason that the debtor's liability for breach of contract, but the cross-default clause breaks through this limitation, it is quite a "first strike, after the disaster" flavor, that is, trying to catch up in the borrower's other loan contracts under the debt repayment crisis before the remedial measures taken to avoid being in a worse position than the other creditors. This form of default in China's current law, although there is no clear provisions, but it does not violate the contract law of the relevant jurisprudence and the spirit of the law, the current "contract law" in the right to rest assured that the defense can be used as the basis for its application of jurisprudence. Therefore, the cross-default clause can be used as a contractual clause into the contract, so that the lender can timely and comprehensive control of the borrower's credit level.

Characteristics of credit risk

The types of credit risk can be generally divided into market risk and non-market risk. Market risk is mainly from the production and sales risk of the enterprise (the borrower) (that is, the borrower in the production and sales of goods in the process, caused by changes in market conditions and production technology and other factors; non-market risk mainly refers to natural and social risk. Natural risk is due to natural factors so that the borrower suffered economic losses can not repay the credit principal and interest risk; social risk is due to the risk caused by the behavior of individuals or groups in society.

The prevention of credit risk in commercial banks is mainly the prevention of bad credit. Industrial and Commercial Bank of China's credit manual has a famous quote:?°We charge a higher interest rate, it is difficult to make up for the loss of credit principal!" China fully implemented the five-level credit classification system in 2002, which categorizes bank credit assets into five categories according to the degree of credit risk: normal, concern, subprime, doubtful, and loss. Non-performing credit mainly refers to the substandard, doubtful and loss categories. Bank credit risk refers to the possibility of suffering loss of assets due to the influence of various uncertainties, in the course of the bank's operation and management, when the actual earnings results deviate from the expected earnings target. Credit risk refers to the possibility that the bank's funds will suffer losses due to the borrowing enterprise's inability to return the credit principal and interest on time for various reasons. Banks account for a significant proportion of the credit business is credit business, credit has a higher risk, outstanding return characteristics, the whole bank's operation is significant. Therefore, the study of credit risk is of great significance. Generally speaking, commercial bank credit risk has the following characteristics:

Countermeasures against credit risk

First, revise and improve the credit management system to ensure the coordination, cooperation and constraints between the various systems, to ensure that the implementation of the credit management system. First, improve the credit file management from the system. As soon as possible to formulate and implement the "credit file management implementation measures", on the collection of credit files, handover, inspection of express provisions, assigned to specialists responsible for, and regular inspection, assessment of the implementation of the situation. On the issue of false enterprise financial information, we can consider the establishment of "four consistent audit" and "financial statement audit liability compensation system". Specifically, that is: on the one hand, the bank itself on the borrowing enterprise's general ledger, ledger, original documents and important physical verification, to achieve the "four consistent"; on the other hand, can sign a contract with the CPA firm, commissioned by the firm of the bank loan applicant's financial statements for audit, and issued an audit report as a basis for the approval of the loan bank and at the same time, in the contract, such as the report of the inaccurate and cause the The contract also stipulates that if the loan is lost due to inaccuracy of the report, the CPA and his firm will be responsible for compensating the bank in full for the loss suffered as a result.

Secondly, further improve the risk control system centered on loan risk management, such as authorization of credit granting, separation of audit and loan, hierarchical approval, collective approval, and "three checks" of loans. Including: in the handling of credit business in strict accordance with the business process, job authority and the exercise of authority to operate under the conditions of the strengthening of different positions, the role of mutual supervision and constraints between departments, the implementation of the whole process of risk control of the business to prevent the occurrence of a variety of irregularities; the development of pre-credit investigations, loan review and post-credit checks and implementation of the rules and regulations, the provisions of the content should be included, the way of investigation, verification methods, etc., to avoid formalities, to avoid the implementation of the rules. and so on, in order to avoid formalities. At the same time, the establishment of a sound job responsibility system, credit management responsibility to each department, each post and each person, strict assessment, to prevent the phenomenon of non-compliance with the law.

Second, the establishment of a sound credit special management institutions, to prevent the excessive concentration of credit power, the implementation of credit decision-making democratization and scientification. First of all, we should really implement the system of loan separation, as soon as possible, the review and approval of loans were implemented to different functional departments, clear the scope of work of the loan review department, job duties and work objectives, standardize the loan approval department's work system, the content of the examination and approval, examination and approval authority, examination and approval procedures and examination and approval of responsibility.

Secondly, for large loans and difficult loans, a special loan management committee should be set up, specifically responsible for loan approval decision-making. The committee can be a non-permanent organization, but it should be composed of administrative leaders and business experts, who are responsible for providing the basic information of loan applicants, loan risk analysis reports and expert opinions, and implementing democratic decision-making for loan approval.

Third, the loan risk assessment is specifically implemented to a functional department independent of the credit business department. Regular assessment of loan risk is a specific task to monitor the degree of loan risk, which requires an independent, scientific and objective quantitative assessment of the risk situation in the life cycle of each loan, and loans reaching a certain level of risk will require the relevant departments to take effective measures to resolve and transfer the risk. Therefore, in order to ensure the objectivity, scientificity and timeliness of the loan risk assessment, this work needs to be independently accomplished by a department other than the credit business department. The establishment of a specialized credit management agency is intended to prevent the excessive concentration of credit power and to establish a "firewall" in the distribution of credit power by making use of the relative independence of the agency. However, in order to ensure the mobility of information, to ensure that all departments can fully occupy, **** enjoy the collection of borrower credit information, should also establish a system of information flow in the relevant departments, to prevent the occurrence of the division of land, public **** information by a department of private possession.

Third, the establishment of a borrower credit information *** enjoyment system. The above two measures are intended to solve the problem of credit management of individual branches of commercial banks, but since the business field of individual branches is limited to a certain region, it is impossible to have a comprehensive grasp of the creditworthiness of existing borrowers, especially future borrowers. Therefore, commercial banks should also set up a borrower credit information system within their systems, so that all their credit business departments can have a comprehensive picture of the creditworthiness of borrowers, the operation of the local economy, the operation of the national economy, and the macro- or micro-economic policies of the central and local governments. The borrower credit system can collect information about borrowers who have money not returned, who are unable to repay debts as they fall due, or who are in poor running condition and whose loan risks are too high, and prohibit its branches from granting new loans to non-performing borrowers by exchanging the "blacklist of non-performing borrowers" within the system and taking effective measures to recover the old loans in time

What is the introduction of the risk evaluation of loans and the assessment of the risk of loans? What is the introduction to this end, I do not know you find the information you need from it?