GBALG2004.ppt

Meeting Managers BPR

Organizing the crediting process

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Model of material risk monitoring

Business Analysis Financial Analysis Position of the Bank

Conclusions

Critical success factors

Internal strengths and weaknesses SW

(Company and entrepreneur)

External opportunities and treats OT

(Market / Environment)

Conclusions Conclusions

Input / output

- Strategy

- Marketing

- Environment

- Company

- Entrepreneur

- Business plan

Relation/weights

Form Opinion

Decision Making

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Teamwork

Making a good application is teamwork

• Discussion Commercial and credit officer

• Discuss a case with your colleague

• Everyone involved need to focus on preventing risk

• Everyone has to take his responsibility

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Steps in the crediting

process

• Preparing a visit

• Business analyses

• Financial statement analyses

• Collateral analyses

• Loan structuring

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Importance of a well structured lending process

• Efficiency

• Improving the workflow when the process is transparent

• Reduced risks

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Reasons for delays of the final decision

• Delay in receiving Credit Committee approval

• Client does not sent the necessary information

• Lengthy legal and collateral registration process

• Delay receiving information of clients to fulfil conditions of

disbursement

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Sources for commercial officers to perform credit

analyses

• Internal information

• Customer

• Documentation

• Site Visit

• External checking

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Process of approval

• Credit Committee

• Loan is rejected

• Approval loan

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Disbursement

• Conditions for disbursement

• Collateral registration

• Planning process of Monitoring

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Role of the commercial officer

• Relationship between BPR and the client

• Marketing expert

• Guard of reputation of BPR

• Stimulating promotion by mouth to mouth

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Lending as an art and a science

• Credit decision based on complete information

• Understanding motivation and character of the customer

• Obtain the facts of the loan request

• Analyzing the information to tell the real story

• Preparing cash flow and calculate repayment capacity

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Minimum of information

• Loan amount requested

• Loan use

• Information on the borrower

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Analyze the risks on the 3 M’s

• Management

• Money

• Market

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Some criteria for the potential borrower

• Does he have the right skills for this business

• Does he have the right personality and commitment

• Dependence on owner’s draw and household income sources

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To know about the investment plan

• Is there need for more working capital

• How long is the cash cycle

• How realistic are the growth projections

• Is this the right amount of financing

• Can he manage a larger cash flow when receiving a larger loan?

• Can the business pay principal and interest

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Importance of repeat loans

• Retain the clients when they grow

• Process for the second loan is more efficient

• Commercial officer has already a relation and knows the

business

• Client is obviously satisfied and is ready for mouth to mouth

promotion

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Loan structuring

• Right amount of money is lent

• For the right amount of time

• With the right repayment frequency

• Under the right circumstances

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Keys to built a good loan structure

• Loan amount and repayment capacity

• Repayment structure

• Disbursement and other conditions

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5 key questions to determine the repayment capacity

• Are cashflow and costs verified and reasonable?

• Are the costs for producing, delivering and service over- or

underestimated?

• How long is the operating cash cycle?

• Does the experience of the borrower fit the loan amount, terms

and project?

• Is the borrowers contribution sufficient, accurate and verified?

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Credit Committee

• Discussion of the loan between managers with different

experience

• Preparation is very important

• Filing reduces risk and improves efficiency

• Max time of the meeting is 2 hours

• Decision based on commitment

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Five reasons for monitoring

• Let the customer know that BPR is taking an interest in their

business

• To catch any potential problem

• Document gained information to built up a file

• Finding new clients through current clients

• To built a relationship with the client: Know your market and

know your customer