demo presentation - conf.mbri.ac.irconf.mbri.ac.ir/ebps4/userfiles/file/اسلایدها/روز...

Credit Risk System (CRS)

Bankers Serving Bankers

DEMO Presentation

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6 Sigma Risk and Credit Management System, better known as the CRS, was created to provide risk ratings for Corporate and Commercial obligors. It was also designed to be a single platform for both relationship and credit officers within a bank.

The system was designed to be a practical tool across the entire credit and marketing hierarchy. In view of its diverse functions, the system is one of a kind.

The System

The CRS

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Basel Accord Compliant

Web-based Centralized Controls Forward Looking Centralized Economic and Industrial Assessments Portfolio Management

User Friendly

Easy screen access Drop Down Menus Flexible Navigation and Admin Plug & Play

Efficient & Practical

Multi-lingual Automated Credit Processing Uses Templates for Term Loans Captures SMEs CRM & Road to B2 compliant

Future Enhancements

Stress Testing (ICAAP based) Industry Studies and Peer Analyses Target Market and Risk Acceptance Criteria controls Marketing and Selling Strategies Financial Institution Risk Rating

Flexible Reporting

All reports are either Exported, or Printed. These also include: The Obligor Information Report (OIR) The Executive Credit Memo The Full Credit Memo Summary of Terms and Conditions Risk Rating Summary Recommendations

Main Features

The CRS

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The RCMS currently provides four main functions:

1. Financial Modeling & Analysis

2. Credit Risk Rating

3. Credit Application & Automation

4. Portfolio Risk Rating (PRR) and Concentration Risk calculation

Main

Functions

The CRS

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Main Screen

Obligors

The Obligors section is divided into four sections:

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• Covers general information about the Obligor

• Attached to the Credit Application Report

• First page data may be imported from the core banking system via an excel file

• Relies on customizable drop-down menus

Menu Options

Obligor Information

Report

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Snapshots

Obligor Information

Report

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Snapshots

Obligor Information

Report

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Snapshots

Obligor Information

Report

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Financial Information

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The User can enter as many years as required and data entry is very easy.

Financial Data Entry


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Data entry of financial information is in the form of tables and is very easy to use with an embedded calculator.



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All possible accounts exist with the ability to add rows for more details if required.



A scroll menu hovers on the side of the screen so that the user can jump to the next account of choice.

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Snapshots


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Financial Modeling & Analysis

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The Financial Analysis module captures historical financial data and generates Financial Analysis, Financial Forecasting, Sensitivity Analysis and Facility Structuring.

Financial Analysis

Financial Modeling &

Analysis

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Analysis

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Analysis

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Analysis

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Financial Projections


Analysis

Future Assumptions. Based on a default scenario, and requiring only 3 main assumption inputs, a financial forecast is generated for the obligor based on historical trends. The credit officer can then add and apply as many different scenarios as required.

Projected Financials, Cash Flows & Ratios. Whichever assumption scenario is used, a 3-year forecast is generated for the Balance Sheet, Income Statement, Cash Flows, Ratios and Facility Structuring. In the near future, users will be able to create projections for an unlimited number of years.

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Sensitivity Analysis


Analysis

For whichever scenario is used, the credit officer can measure what impact a change in any of the main assumptions would have on projected cash flows.

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Facility Structuring


Analysis

RCMS automatically calculates the type and value of required bank facilities for the Obligor in terms of L/Cs, Overdrafts, Open Account, Receivable Financing, Term Loans, etc.

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Risk Rating

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Risk Rating Calculation

Obligors Risk Rating

The Risk Rating Module allows the credit officer to generate the Obligor Risk Rating for each Obligor. The Risk Rating covers both quantitative and qualitative data.

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Risk Rating Qualitative


Qualitative Data. The qualitative Risk Rating is calculated based on a detailed assessment of Management, Industry and Environment. Management The system calculates the Management Risk Rating at 7 levels.

Questions are comprehensive with a wide range of answers under each level to help reduce the element of subjectivity.

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Industry RCMS calculates the Industry Risk Rating at 2 levels, one tied to the Industry as a whole and the other tied to the company.

The questions at the Industry level are answered from a centralized location by an Industry Expert at the bank thereby impacting all obligors within that industry.

The questions at the company level are answered by the credit officer for each Obligor.

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Environment The Environment Risk Rating takes into account political, economic and regional elements of a given country.

The questions are centralized and answered at the country level by an economist at the bank. All Obligors within the same country will automatically get the same risk rating for Environment.

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Credit Application

Overview

Credit Application

The Credit Application module is the credit automation segment of the system where Users can create and submit credit applications. With high reliance on information entered within the Obligor Information, Financial Analysis and Risk Rating modules, a large segment of the Credit Application is automatically generated.

This saves a significant amount of time that is normally required for data entry of financial statements and other information into the application.

The User is prompted when an application requires his/her attention as shown in the Credit Application Inbox below:

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Sections of Credit

Application

Credit Application

The Credit Application is very structured and covers quantitative and qualitative data.

The application is divided into 3 main parts: • The Credit Proposal • Term Sheet • Credit Processing & Tracking.

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The Credit Proposal

Credit Application

The Credit Proposal is the main part of the credit application.

It covers the following main sections:

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The Credit Proposal

Credit Application

The Credit Officer may copy an application for an Obligor from a previous application (thereby populating existing facilities into the application, purposes of credit and repayment details).

The application is composed of tables and drop-downs, which may be customized by the Administrator at each bank, to help reduce the writing requirements. But for added flexibility, the application contains free-text areas for input of additional required information.

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The Credit Proposal

Credit Application

Three years of financial analysis data and three years of projected data (i.e. cash flow and ratios) are automatically populated into the credit application from the Financial Analysis module.

Analysis questions are automatically created and inputted into the credit application to guide the credit officer with the analysis.

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The Credit Proposal

Credit Application

Strength and Weakness analysis for Management & Industry is available for the Credit Officer to choose from based on the questions answered within the Risk Rating Module.

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The Credit Proposal

Credit Application

Users can identify Key Success Factors for the Industry and identify whether the Obligor complies or does not comply with these factors.

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The Credit Proposal

Credit Application

Account Profitability is calculated for each Obligor. This is currently manual but will soon become an automated section of the credit application.

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The Credit Proposal

Credit Application

Deviations and Exceptions are currently entered manually but will soon become automated whereby the RCMS will automatically recognize deviations where they exist.

The number of deviations allowed will be pre-determined at the Admin level. Additional Features

Free Text Areas are available throughout the application, allowing the Credit Officer to enter additional information where required.

In addition, format-able word-document sections are available for more elaborate analysis such as Industry Trends and Risk Outlooks.

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The Credit Proposal

Credit Application

Supporting documents may be attached to the credit application via links that divert the reader to a folder on the bank’s server where the documents are stored.

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The Credit Proposal

Credit Application

A Risk Rating Summary is available at the end of the application summarizing : • Financial Strengths & Weaknesses (Historical & Projected) & Risk

Rating • Sensitivity Analysis with Mitigants • Management Strengths & Weaknesses & Risk Rating • Industry Strengths & Weaknesses & Risk Rating

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Term Sheet

Credit Application

The Term Sheet is the second part of the credit application and it covers the terms and conditions for the facilities requested as part of the credit request. Composed of the following main parts,

each section has fully customizable drop-down menus for speed of processing.

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Term Sheet

Credit Application

To further speed up the process, the Administrator may create Term Sheet Templates to be used for different types of financing, such as Contracting Finance, Real Estate Loan, Machine Loan, etc.. The Credit Officer may then choose the applicable Term Sheet template to use and automatically populate the Term Sheet based on standard terms of the required financing.

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Process & Track

Credit Application

The Process & Track section is the final section of the Credit Application. It allows the Credit Officer to submit the application as well as track it. Processing Throughout the application, the Credit Officer has a small “side notes” window to the left of the screen where he/she can enter notes about each section.

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Process & Track

Credit Application

The Side Notes entered throughout the application are then summarized in a table at the end of the application. These will be saved as Notes of the user for previous or subsequent approving levels to view. Each processing level has access to the similar Side Notes that can be used to leave comments for others to view.

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Process & Track

Credit Application

When an application is processed, for example submitted to the next approving level, the user(s) at the next level* will receive an email notification. In addition, he/she will informed of so on the Home Screen upon the next login. *Notifications may be received for groups & other levels as well

(defined by Administrator)

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Process & Track

Credit Application

Members Decision Tracking This screen allows all levels to view the decisions of each processing level as well as the notes entered by each.

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Process & Track

Credit Application

Application Statistics For tracking purposes, and to know where there are backlogs in the processing of the credit application, there are statistics that detail the processing time of each application and how long it has taken at each level.

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SMEs

Credit Application

SMEs The Credit Application may be customized for SMEs at the Admin level to reduce the size of the application & speed up the processing:

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Credit Admin

Credit Application

The Credit Admin allows the bank administrator to define all the following: 1. Number of approving levels – Depending on the bank process, the number of levels can be entered and determined by the Administrator at each bank.

2. Approving terms – The Administrator can determine who can approve/decline an application, i.e. who is authorized to approve at each level. There is a very elaborate process that takes into account many possible scenarios of single/joint approvals for each level.

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Credit Admin

Credit Application

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Credit Admin

Credit Application

3. The Administrator can also define the maximum approval amount and maximum Obligor Risk Rating for each approving level.

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PRR

Portfolio Risk Rating

The Portfolio Risk Rating allows the user to generate statistics at the Portfolio level : • Portfolio Risk Rating • Frequency Distribution (Obligor Risk Rating & Facility Risk Rating) • Portfolio Capital Adequacy • Expected Loss • Unexpected Loss • Risk Adjusted Return on Capital (RAROC) • Return on Risk Adjusted Capital (RORAC) • Concentration

All the above calculations can be done on different cuts/filters of the portfolio including: • Per Risk Rating trench (Obligor or Facility) • Per Industry • Per Country • Per User • Per Facility Type • For SMEs • Per Collateral • And more…

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Snapshot

Stress Testing

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Upcoming Modules

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Future Enhancements

CRS Development

Upcoming Modules • Target Market : Target Market criteria are fully customizable at the bank level &

can produce how many deviations a client has. This results in different actions (either rejecting credit based on maximum x pre-defined deviations or requiring an additional level of approval, etc……).

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Future Enhancements

CRS Development

• Risk Acceptance Criteria: Will help determine facility structures and pricing for each

credit.

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Future Enhancements

CRS Development

Near Future • Account Activity Analysis • Project/Contractor Financing • Industry Studies and Peer Analyses • Marketing and Selling Strategies • Financial Institution/Investment Companies Risk Rating

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Admin Privileges

RCMS Admin

The Assigned Administrator at the bank has the ability to customize and edit all the following:

• Users & Privileges: Add as many users as required, define their privileges (down to the screen they can access), control their login times, language used, etc…

• SME: Define what comprises an SME client in terms of any combination of sales amounts, legal structure, and equity.

• Weights: Change the weights at both quantitative and qualitative level

• Lists Customization: Edit the drop-down menus used throughout the system within all modules

• Financial Analysis Customization: Customize the ratios viewed in the Financial Analysis and Credit Application modules and at printing levels

• Credit Application: Define approving levels, users within each level, and approval schemes

• PRR: Define the parameters entered into the calculation of the PRR including Capital to RW Assets ratio, Revenue to Expense, Return on Economic Capital, Cost of Funds, etc…

• And much more….

demo presentation - conf.mbri.ac.irconf.mbri.ac.ir/ebps4/userfiles/file/اسلایدها/روز...

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