Credit Risk Analysis

Course Description:

Credit Risk Analysis is finance course for the BBA and MBA programs. Its main objective is to give students a comprehensive overview of how risk could be reduced while investing in project or lending. It has been designed to equip students with the basic tools and techniques necessary to be a successful credit risk manager with a good understanding of the risk factors.

Learning Outcomes:

  • Develop awareness of the responsibilities of Credit Risk manager while acquire the skills necessary to analyze typical business situations from a financial perspective.
  • Ability to value real projects for investment/lending.
  • Ability to assess drivers of corporate performance

Recommended Text Books:

#               Title Author(s) Assigned Code
1 Credit Risk Management S.K.Bagchi CRM
2 Laws of Banking in Pakistan Asrar Saddiqui

 

BIP
3 State Bank of Pakistan   SBP

Discussion Plan

Session Topics Assigned code
Week 1

 

An overview of the course its requirements and expectations

What is Risk? Risk vs. uncertainty. Risk importance and management

CRM
Week 2 Types of risk

 

Capital risk, credit risk, market risk, liquidity risk, operational risk, earning risk.

 

CRM
Week 3

 

Types of finances in Pakistan

Agriculture Finance, Industrial Finance, Export Finance

 

BIP
 

Week 4

Principles for prudent lending

Safety Issues and 5 Cs, Liquidity, Dispersal, Security and Remunerations

 

BIP
Week 5 Forms of Lending

Different types used for lending by banks, Cash Finance, Overdraft, Loans and Types, Purchase and Discounting of Bills

 

BIP

Week 6 Securities for Advances

Classification of Securities, Banker`s Lien, Charge and its Types,   Pledge, Hypothecation, Guarantees, Indemnity

 

BIP

Week7 Advances Against Life Policy

Proposer, Assured, Sum Assured and premium, Types of Life policies, Validity of policy, Advantages and Disadvantages, Precaution

 

BIP

Week 8 Case Discussion

Revision of course

 
 

Week 9                                             Mid Term Exam

 

Week 10 Advances Against Life Policy

Proposer, Assured, Sum Assured and premium, Types of Life policies, Validity of policy, Advantages and Disadvantages, Precaution

Advances Against Stock Exchange Securities

Types of shares, Quoted and Unquoted securities, Advantages and Disadvantages  of stocks as Securities, Precautions and realization of securities

 

 

 

 

 

BIP

Week 11 Advances Against Immovable Property

Definition of mortgage, Types of mortgage, Rights of mortgager and mortgagees, Sub mortgage

 

 

BIP

Week 12 Financial Statement  Analysis  and its Role in lending

Ratio Analysis, Liquidity Ratio, Turnover Ratio, Profitability Ratio, Leverage Ratio, Elements of Cash Flow, Interpreting Cash Flow

 

 

 

CRM

Week 13 Sector Analysis

Attractiveness of sector for lending, Internal and External analysis

 

CRM

Week 14 Country Analysis

Introduction, Direct/Indirect Country Risk, Composition of Country Risk, Important Macro Factors in Country Risk Measurement, Contingency Plans and Exact Strategies

 

 

CRM

Week 15 Prudential Regulations State Bank of Pakistan SBP

 

Week 16 Case Discussion  
Week 17 Presentations  
 

Week 18                                                          Final Exams

 

 

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