What is a bank loan portfolio
Bank loan portfolio - the amount of debt that customers have in front of the institution in a specific period of time It is a digit that is calculated with reference to the date. It is taken into account that lending operations are performed daily.
Types of loan portfolios
The loan portfolio is gross and net. The first includes loans issued but not repaid. Net is calculated with the minus amount of reserves that are prepared in case of losses. Every solid financial institution should have a reserve fund. Its size is evidence of opportunity and risk.
Portfolios differ with respect to bank policy:
- Optimal. It best fits the marketing and credit strategy of the bank.
- Balanced. Aimed at solving the most ambiguous task “risk - profitability”. The structure is similar to the optimal one, but may differ from the first in separate stages.
- The risk is neutral.This option has low rates of riskiness and profitability.
They are also divided for other reasons. By subjects of lending are divided into types for individuals and legal entities. In terms of may be short-term, medium-term, long-term. The more short-term loans in the volume, the more it is considered liquid.
Creating a loan portfolio is the main task of any financial institution, because it allows you to make a profit. Today it is customary to single out several stages of formation. Each takes into account the general and specific principles of the formation of the loan portfolio.
Every bank that decides to provide funds to citizens must:
- analyze the factors that influenced the magnitude of demand;
- to build credit potential;
- ensure the right balance of potential and credit;
- Develop a plan that will help improve an existing portfolio.
When forming the structure, various factors affecting the development of the entire bank are taken into account. These include features of the market sector, for example, the operation of commercial institutions affects certain economic sectors.
An important parameter is the amount of bank capital.It depends on the maximum allowable limit issued to each borrower. Because of this, it acts as a limiting factor.
When all stages are completed, it remains to carry out effective management of the company. It is based on making profit by minimizing risks. The entire organizational structure is based on a clear delimitation of employees' competencies. Managers who are at different levels, have their own powers, can change the basic conditions for granting loans based on the previously created formulas.
What is and is not included in the portfolio?
The structure includes the ability to choose a currency or ruble loan account, the availability and method of providing property as collateral, especially debt repayment. Depending on the policy of the bank, this list may be supplemented with other items.
The peculiarity lies in the fact that the loan portfolio does not include loans issued to government agencies and various extra-budgetary funds. This is due to the creation of special conditions for them, which imply the absence of collateral or a significant reduction in interest rates.Therefore, the loan portfolio shows only typical activities of a financial institution.
Thus, the formation of the loan portfolio is the first step to obtaining the desired result. This indicator is displayed on the rating of the bank. Therefore, it is important to use the data obtained in the analysis and apply them in solving practical problems. One of the most effective tools for raising the level of a bank is the development and implementation of an optimal portfolio. A properly formed balance of assets and liabilities allows management to correctly choose the current rate, taking into account risks and potential.
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