Analysis of Financial Institutions

Analyzing a financial institution is very different from analyzing a corporate entity. When a financial institution has liquidity problems, the end can be fast and furious. This two day class will cover the qualitative and quantitative analysis of financial institutions. Exercises and case studies are included.

12-Apr-2010 -- 13-Apr-2010New YorkUSD$2475
NY Institute of Finance - Midtown9:00am - 4:30pm Instructional Method:
Group-Live
Instructor(s): [ Henry Pullman; ] Mon Tue Level: Intermediate

21-Jun-2010 -- 22-Jun-2010ChicagoUSD$1856
NY Institute of Finance - Chicago9:00am - 4:30pm Instructional Method:
Group-Live
Instructor(s): [ Henry Pullman; ] Mon Tue Level: Intermediate

23-Sep-2010 -- 24-Sep-2010New YorkUSD$1856
NY Institute of Finance - Midtown9:00am - 4:30pm Instructional Method:
Group-Live
Instructor(s): [ Henry Pullman; ] Thu Fri Level: Intermediate

CPE CREDITS
14.0
Investment bankers, commercial bankers, analysts and associates, central bankers, credit officers, IT staff.
No advance preparation required.
Students will be able to:
  • Analyze a bank's balance sheet and income statement
  • Utilize the CAMEL analytical approach
  • Identify warning signs of potential problems
  • Appreciate the key performance indicators for banks
  • Gain insight into how banks manage credit risk and funding
  • Gain insight into off-balance sheet risk for a major financial institution
  • Appreciate the implications of capital adequacy concerns and standards
  • Utilize ratio analysis and asess the relative financial condition of peers
Major Principles of Accounting
"The course covered a lot of currently relevant issues in banking - very topical."
"The instructor was very knowledgeable!"
DAY ONE
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

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

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

Objectives of Financial Institutions Risk Analysis

  • Bank Regulation and Due Diligence
  • Credit Risks
  • Liquidity Risks
  • Interest Rate Risk
  • Financial Leverage

DAY TWO
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

Analyzing Management

  • Management Responsibilities
  • Assessing Management
  • Management Quality and Corporate Governance

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

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

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

Analyzing Equity

  • Objectives of Capital Ratios
  • Importance of Capital Adequacy
  • Assessing Capital Adequacy
  • Implications of Basel

Clients who register for this course will receive a complimentary 3 month subscription to the Financial Times and FT.com. The Financial Times is the world's most respected financial newspaper, providing a broad assessment on finance, business and the industrial sector. Subscriptions will start within 6-8 weeks of the application process and are limited to one per client. For questions about your subscription, call 800-628-8088 or email uscirculation@ft.com. U.S. enrollees only. (All non-U.S. enrollees will receive a subscription to FT.com only.) Lunch included for all students taking day classes.

Lunch included for all students taking day classes.