Analysis of Financial Institutions
Qualitative and quantitative analysis of financial institutions and how it differs from analyzing a corporate entity.
CPE Credits: 14
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Module 1: Macro Market Overview
- Demystifying the Banking Industry
- Trends/Issues in the Banking Industry
- The Banking Industry Outlook
- Why do banks and financial institutions fail?
- A Bank's performance indicators
Module 2: Deconstructing A Bank's Financial Statements
- CAMEL analytical method
- Measures of financial condition
- Income and Expenses - Key Categories
- Understanding a bank's earnings and profitability
- Comparing key indicators to peers
- Evaluating core assets and liabilities
- Understanding the relationship between funding and liquidity
Module 3: The Nature of Capital
- What is Capital?
- What are the hidden costs of Capital?
- Basel Capital Models
- Basel definitions of Tier 1 and Total Capital
- Basel II highlights
- The adequacy of 'Capital Adequacy'
- Capital as a performance Indicator
- Global Reactions to 'Capital Adequacy'
- Calculating risk based assets
- The concept of RAROC
Module 4: Objectives of Financial Institutions Risk Analysis
- Bank Regulation and Due Diligence
- Credit Risks
- Liquidity Risks
- Interest Rate Risk
- Financial Leverage
Module 1: Structural Risk and Advanced Risk Management Indices
- Review of Bank Risk Exposures
- Key Industry Risk Ratios and Statistics
- Merger Mania and Strategy
- Generic Typology of Bank Characteristics
Module 2: Analyzing Management
- Management Responsibilities
- Assessing Management
- Management Quality and Corporate Governance
Module 3: Analyzing Earnings and Profitability
- Factors that influence bank earnings
- How banks manage earnings
- Analysis of overall profitability
- Ratio Analysis and measures of overall profitability and earnings
- Evaluating Changes in Earnings and Profitability
- Evaluating Interest Income and Non-Interest Income Components of Revenue
Module 4: Analyzing Asset Structure
- Asset Quality and NPLs
- How the Banking Credit Cycle affects Assets Quality
- Qualitative Review of Asset Quality
- Quantitative Review of Asset Quality
- Key Asset Quality Indicators
- Asset Quality Checklist
- Provisioning, Loan Loss Reserves and Loan Classification
- Liquidity and the Maturity structure of Assets
Module 5: Analyzing Liabilities
- Bank Annual Reports and transparency
- Liability Management
- Core Deposits
- Net position in Interbank Market
- Central Bank Lines
- Matching or Mismatching to Foreign Exchange
- Long-Term Debts, terms, subordinated vs. unsubordinated
- Vulnerability to sudden changes in the market (i.e. regulations, etc.)
- Why Banks are Highly Leveraged
- Capital vs. Liquidity: Insolvency Risk vs. Liquidity Risk
Module 6: Analyzing Equity
- Objectives of Capital Ratios
- Importance of Capital Adequacy
- Assessing Capital Adequacy
- Implications of Basel