You are previewing The Bank Credit Analysis Handbook: A Guide for Analysts, Bankers and Investors, 2nd Edition.
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The Bank Credit Analysis Handbook: A Guide for Analysts, Bankers and Investors, 2nd Edition

Book Description

A hands-on guide to the theory and practice of bank credit analysis and ratings

In this revised edition, Jonathan Golin and Philippe Delhaise expand on the role of bank credit analysts and the methodology of their practice. Offering investors and practitioners an insider's perspective on how rating agencies assign all-important credit ratings to banks, the book is updated to reflect today's environment of increased oversight and demands for greater transparency. It includes international case studies of bank credit analysis, suggestions and insights for understanding and complying with the Basel Accords, techniques for reviewing asset quality on both quantitative and qualitative bases, explores the restructuring of distressed banks, and much more.

  • Features charts, graphs, and spreadsheet illustrations to further explain topics discussed in the text

  • Includes international case studies from North America, Asia, and Europe that offer readers a global perspective

  • Offers coverage of the Basel Accords on Capital Adequacy and Liquidity and shares the authors' view that a bank could be compliant under those and other regulations without being creditworthy

A uniquely practical guide to bank credit analysis as it is currently practiced around the world, The Bank Credit Analysis Handbook, Second Edition is a must-have resource for equity analysts, credit analysts, and bankers, as well as wealth managers and investors.

Table of Contents

  1. Cover
  2. Contents
  3. Title
  4. Copyright
  5. Preface to the New Edition
  6. Chapter 1: The Credit Decision
    1. Definition of Credit
    2. Willingness to Pay
    3. Evaluating the Capacity to Repay: Science or Art?
    4. Categories of Credit Analysis
    5. A Quantitative Measurement of Credit Risk
  7. Chapter 2: The Credit Analyst
    1. The Universe of Credit Analysts
    2. Role of the Bank Credit Analyst: Scope and Responsibilities
    3. Credit Analysis: Tools and Methods
    4. Requisite Data for the Bank Credit Analysis
    5. Spreading the Financials
    6. Additional Resources
    7. Camel in a Nutshell
  8. Chapter 3: The Business of Banking
    1. Banks as Lenders
    2. Banks as Financial Service Providers
  9. Chapter 4: Deconstructing the Bank Income Statement
    1. Anatomy of a Bank Income Statement: An Overview
    2. A Further Dissection
    3. Income Statements Under IAS
  10. Chapter 5: Deconstructing a Bank’s Balance Sheet
    1. Key Differences Between the Balance Sheets of Banks and Nonfinancial Companies
    2. The Essential Line Items of the Bank Balance Sheet: Asset Side
    3. The Essential Line Items of the Bank Balance Sheet: Liability Side
    4. Off-Balance-Sheet Items and Derivatives
  11. Chapter 6: Earnings and Profitability
    1. The Importance of Earnings
    2. Evaluating Earnings and Profitability: An Overview
    3. Earnings Analysis
    4. Profitability Ratio Analysis
    5. Profitability: An Illustration of a Peer Analysis
    6. Macro-Level Influences on Bank Profitability
    7. Micro-Level Influences on Bank Profitability
    8. Quality of Earnings
  12. Chapter 7: Asset Quality
    1. Asset Quality and NPLS: An Introduction
    2. Resolution of NPLS
    3. Accounting for NPLS
    4. What Causes Excessive NPLS
    5. Macroeconomic Influences on Asset Quality—Economic, Business, and Credit Cycles
    6. Data and Ratio Analysis
    7. Loan Book Composition, Credit Culture, and other Soft Factors
  13. Chapter 8: Management and Corporate Governance
    1. An Overview of Management Appraisal
    2. Corporate Governance
  14. Chapter 9: Capital
    1. The Function and Importance of Capital
    2. What is Capital?
    3. Measuring Capital Strength: Traditional Ratios
    4. Regulatory Capital and the First Basel Accord
    5. The Basel II and Basel III Accords and the Concept of Economic Capital
  15. Chapter 10: Liquidity
    1. What is Liquidity and Why is it Important?
    2. Elements of Bank Liquidity Analysis
  16. Chapter 11: Country and Sovereign Risk
    1. Overview
    2. Fiscal, Monetary, and Trade Policies
  17. Chapter 12: Risk Management, Basel Accords, and Ratings
    1. Risk and the Importance of Risk Management
    2. Categories of Bank Risk
    3. Risk Management Methods
    4. Basel II and Basel III
    5. Ratings
  18. Chapter 13: The Banking Regulatory Regime
    1. Overview
    2. The Rationale for Regulation
    3. The Regulatory Regime
    4. The Structure and Strength of the Regulatory Apparatus
    5. The Quality of the Legal System and Creditors’ Rights
    6. Gauging Banking System Fragility
    7. State Ownership and State Support of Banks
  19. Chapter 14: Crises: Banking, Financial, Twin, Economic, Debt, Sovereign, and Policy Crises
    1. An Introduction to Banking and Financial Crises
    2. Early-Warning Systems of Financial Crises
  20. Chapter 15: The Resolution of Banking Crises
    1. Recognizing the Crisis
    2. First Response
    3. Supply Liquidity and Stop the Bleeding
    4. Recapitalization and Restructuring
    5. Asset Disposal and Regulatory Reform
    6. Bank Restructuring in Malaysia During the 1990s Asian Financial Crisis: A Practical Example
  21. About the Authors
  22. Index