Complications of cholecystitis. Acute cholecystitis

The importance of assessing customer creditworthiness for managing credit risks of banks

Creditworthiness assessment occupies the most important place in the credit risk management system.

A competent assessment of creditworthiness allows

• determine whether the borrower is able to service his debt,
• calculate the most acceptable debt burden for a given borrower,
• assess the necessary security for the return of borrowed funds.

Depending on the borrower’s credit history and the bank’s previous experience of cooperation with this client, the creditworthiness assessment can be more or less detailed and thorough.

Example 1

Thus, in the absence of overdue payments, the creditworthiness of enterprises that have received a line of credit from a given bank, as well as clients who have the opportunity to overdraft with a debit card or bank credit card, is not assessed every time.

Assessing creditworthiness is important for both legal entities and individuals, however, given that legal entities, as a rule, attract loans for significantly larger amounts than individuals.

Note 1

An error in assessing the creditworthiness of even one borrower can lead to a deterioration in the financial position of the bank itself.

Assessing the creditworthiness of individuals

When lending to individuals, reducing the bank's credit risk and possible losses is possible only with an accurate assessment of the borrower's ability to fulfill his loan obligations; the most important thing here is an effective assessment of creditworthiness.

Typically, there are methods for assessing the creditworthiness of an individual:

• scoring;
• underwriting;
• analysis of the borrower's financial situation.

Scoring based on the client’s existing credit history makes it possible for the bank to determine, using mathematical methods, the likelihood of repaying the loan on time. Here we use concepts that are related to the reliability (unreliability) of the client.

Scoring methods and models allow you to reduce the risk of loan non-repayment and make decisions on issuing a loan quickly and impartially. They also allow you to effectively manage your loan portfolio. There is no need to spend a lot of time training employees of the credit department; it is even possible to conduct an express analysis of the loan application in the presence of the client.

When mortgage lending to individuals, the borrower's underwriting is used, the most important thing is the assessment of timely payment of loan payments.

Typically, to analyze the creditworthiness of a potential borrower, the following are requested: a copy of documents identifying the borrower and confirmation of the client’s income: a certificate in form 2-NDFL, a copy of the tax return in form 3-NDFL.

Bank specialists analyze the solvency of an individual borrower based on data on average monthly income and the amount of deductions for the previous six months, as well as information based on a questionnaire.

At the moment, the most universal method of assessing creditworthiness is the method of assessing the client’s financial situation.

Methods and techniques for assessing the creditworthiness of legal entities

In the process of lending to borrowers, Russian banks use different methods to determine the creditworthiness of a potential and actual borrower. In recent years, the system created by the Association of Russian Banks has been considered the most effective and accurate.

This methodology includes the following criteria that a potential responsible and solvent borrower must satisfy:

• solidity – this indicator characterizes the responsibility of the organization’s management, as well as the timeliness and completeness of repayment of previous loans;
• ability is a set of data on the production and financial activities of an enterprise, its position in the market and competitiveness;
• profitability – characterizes the possibility of making a profit when investing in a specific project;
• reality – characterizes the possibility of a potential borrower realizing his plans;
• validity – the need for the client to confirm the amount of the requested loan with calculations and actual data;
• repayment - the ability to repay the loan at the expense of property (movable and immovable) and other material assets owned by the borrower, if the implemented project does not bring profit;
• the security of the loan not only with property, but also with the legal rights of the borrower.

Note 2

It is very important to study the last four indicators simultaneously with such indicators of the enterprise’s balance sheet as asset turnover, liquidity, solvency, profitability and security.

In each of the listed groups of indicators, the most indicative characteristic of the organization under study is determined, and then statistical data is collected and generated on it.

In practice, most often the assessment and characterization of the borrower’s creditworthiness is based on the calculation and detailed analysis of several groups of financial ratios.

Most often, the solvency and liquidity indicators of the potential borrower are taken into account.

The advantage of the methodology indicated below is that standard values ​​can be calculated for many indicators, and this makes it possible to analyze the organization’s activities taking into account all factors. Not only the current, but also the future state of the enterprise depends on the specifics of the industry.

When calculating financial ratios, you can use various standards (Fig. 1).

Figure 1. Optimal values ​​of coefficients divided by type of borrower. Author24 - online exchange of student works

To improve the efficiency of the creditworthiness assessment process, standard indicators of financial ratios by industry can be calculated for previous years.

Since standards for assessing the borrower’s creditworthiness have not been officially established, the bank’s work is hampered. It is almost impossible to determine whether the borrower is able to repay the loan on time in full or not.

Qualitative and comprehensive analysis is based on information that is very difficult to quantify. In order to study the solvency of a particular borrower, a lot of information is required, in addition to what the borrower provided for verification, in particular, information from the security service, as well as information from the bank’s database. In addition, it is necessary to assess in aggregate many risks: production, management, industry, shareholder and others.

Before issuing a loan, the bank needs to collect and analyze a lot of data, but this is not done according to universal schemes, but depending on the credit policy of the bank itself, since there are no universal and unified methods in Russia.

The importance of assessing customer creditworthiness for managing credit risks of banks

Creditworthiness assessment occupies the most important place in the credit risk management system.

A competent assessment of creditworthiness allows

• determine whether the borrower is able to service his debt,
• calculate the most acceptable debt burden for a given borrower,
• assess the necessary security for the return of borrowed funds.

Depending on the borrower’s credit history and the bank’s previous experience of cooperation with this client, the creditworthiness assessment can be more or less detailed and thorough.

Example 1

Thus, in the absence of overdue payments, the creditworthiness of enterprises that have received a line of credit from a given bank, as well as clients who have the opportunity to overdraft with a debit card or bank credit card, is not assessed every time.

Assessing creditworthiness is important for both legal entities and individuals, however, given that legal entities, as a rule, attract loans for significantly larger amounts than individuals.

Note 1

An error in assessing the creditworthiness of even one borrower can lead to a deterioration in the financial position of the bank itself.

Assessing the creditworthiness of individuals

When lending to individuals, reducing the bank's credit risk and possible losses is possible only with an accurate assessment of the borrower's ability to fulfill his loan obligations; the most important thing here is an effective assessment of creditworthiness.

Typically, there are methods for assessing the creditworthiness of an individual:

• scoring;
• underwriting;
• analysis of the borrower's financial situation.

Scoring based on the client’s existing credit history makes it possible for the bank to determine, using mathematical methods, the likelihood of repaying the loan on time. Here we use concepts that are related to the reliability (unreliability) of the client.

Scoring methods and models allow you to reduce the risk of loan non-repayment and make decisions on issuing a loan quickly and impartially. They also allow you to effectively manage your loan portfolio. There is no need to spend a lot of time training employees of the credit department; it is even possible to conduct an express analysis of the loan application in the presence of the client.

When mortgage lending to individuals, the borrower's underwriting is used, the most important thing is the assessment of timely payment of loan payments.

Typically, to analyze the creditworthiness of a potential borrower, the following are requested: a copy of documents identifying the borrower and confirmation of the client’s income: a certificate in form 2-NDFL, a copy of the tax return in form 3-NDFL.

Bank specialists analyze the solvency of an individual borrower based on data on average monthly income and the amount of deductions for the previous six months, as well as information based on a questionnaire.

At the moment, the most universal method of assessing creditworthiness is the method of assessing the client’s financial situation.

Methods and techniques for assessing the creditworthiness of legal entities

In the process of lending to borrowers, Russian banks use different methods to determine the creditworthiness of a potential and actual borrower. In recent years, the system created by the Association of Russian Banks has been considered the most effective and accurate.

This methodology includes the following criteria that a potential responsible and solvent borrower must satisfy:

• solidity – this indicator characterizes the responsibility of the organization’s management, as well as the timeliness and completeness of repayment of previous loans;
• ability is a set of data on the production and financial activities of an enterprise, its position in the market and competitiveness;
• profitability – characterizes the possibility of making a profit when investing in a specific project;
• reality – characterizes the possibility of a potential borrower realizing his plans;
• validity – the need for the client to confirm the amount of the requested loan with calculations and actual data;
• repayment - the ability to repay the loan at the expense of property (movable and immovable) and other material assets owned by the borrower, if the implemented project does not bring profit;
• the security of the loan not only with property, but also with the legal rights of the borrower.

Note 2

It is very important to study the last four indicators simultaneously with such indicators of the enterprise’s balance sheet as asset turnover, liquidity, solvency, profitability and security.

In each of the listed groups of indicators, the most indicative characteristic of the organization under study is determined, and then statistical data is collected and generated on it.

In practice, most often the assessment and characterization of the borrower’s creditworthiness is based on the calculation and detailed analysis of several groups of financial ratios.

Most often, the solvency and liquidity indicators of the potential borrower are taken into account.

The advantage of the methodology indicated below is that standard values ​​can be calculated for many indicators, and this makes it possible to analyze the organization’s activities taking into account all factors. Not only the current, but also the future state of the enterprise depends on the specifics of the industry.

When calculating financial ratios, you can use various standards (Fig. 1).

Figure 1. Optimal values ​​of coefficients divided by type of borrower. Author24 - online exchange of student works

To improve the efficiency of the creditworthiness assessment process, standard indicators of financial ratios by industry can be calculated for previous years.

Since standards for assessing the borrower’s creditworthiness have not been officially established, the bank’s work is hampered. It is almost impossible to determine whether the borrower is able to repay the loan on time in full or not.

Qualitative and comprehensive analysis is based on information that is very difficult to quantify. In order to study the solvency of a particular borrower, a lot of information is required, in addition to what the borrower provided for verification, in particular, information from the security service, as well as information from the bank’s database. In addition, it is necessary to assess in aggregate many risks: production, management, industry, shareholder and others.

Before issuing a loan, the bank needs to collect and analyze a lot of data, but this is not done according to universal schemes, but depending on the credit policy of the bank itself, since there are no universal and unified methods in Russia.

Introduction

The problem of timely repayment of loans issued to individuals is relevant for most banking institutions. Its decision largely depends on the quality of the assessment of the creditworthiness of potential borrowers.

In this regard, careful selection of borrowers, analysis of the terms of the loan, constant monitoring of the borrower’s financial condition and ability to repay the loan are one of the fundamental components of the financial well-being of credit institutions.

Creditworthiness analysis in a large number of banks is carried out by experts who rely mainly on their experience and intuition, which can lead to the introduction of subjective considerations that do not have sufficient grounds into the decision. In a real situation, analysts' opinions often differ, especially if controversial issues that have many alternative solutions are discussed.

The situation is complicated if the credit institution does not have regulatory documents regulating the procedure for ascertaining the client’s ability and intentions to fulfill the terms of the debt repayment agreement. As a result, subjective factors acquire excessive weight in the assessment: the qualifications and interest of the expert and the resulting incompetent or deliberate interpretation of information, leading to decisions that are detrimental to the bank. The lack of regulations and formalization of the procedure leads to the impossibility of subsequent analysis and reasonable assessment of expert decisions.

When developing methods for assessing the level of creditworthiness of individuals, an approach based on calculating the borrower's rating has become widespread. The basis of this approach is an initial questionnaire, the data of which reflects the socio-economic status and ability of the client to repay the loan on time. The scoring system in this case carries out quantitative, semantic analysis and processing of questionnaire data.

Making changes to the survey questionnaire entails the need for adjustments or significant modernization of the entire system. This circumstance limits the possibility of adapting scoring models to the socio-economic conditions of the region in which the banking structure plans to lend to private clients, as well as to changes in the current economic situation. Therefore, this approach does not allow the development of a universal system for automated creditworthiness analysis.

All of the above confirms the relevance of the topic of the course work.

The object of the study is the activities of OJSC "RGS Bank".

The subject is the procedure for assessing the creditworthiness of individuals.

The purpose of this course work is to study the procedure for assessing the creditworthiness of an individual.

To achieve this goal, the following tasks should be solved:

1) become familiar with the economic content of the concept of creditworthiness;

) study the methodological basis for assessing the creditworthiness of individuals;

) analyze methods for assessing the creditworthiness of individuals;

) consider the possibility of modernizing the process of assessing the creditworthiness of an individual.

) implementation of practical assignments under the “Your Conditions” credit program of OJSC “RGS Bank”.

1. Methodological basis for assessing the creditworthiness of individuals

1 Economic content of creditworthiness

In the context of the transition to market relations, economic approaches to lending are changing. An important criterion for granting loans is the borrower’s creditworthiness.

The borrower's creditworthiness is usually understood as the ability to repay the loan debt. Its assessment is the bank’s assessment of the borrower from the point of view of the possibility and feasibility of providing him with a loan. It determines the likelihood of timely repayment and interest payments.

The definition of this concept does not indicate what debt is meant, for what type of loan and for what period. The definition is quite universal, but in real banking practice, the creditworthiness of an enterprise is usually understood as its ability to repay loan debt on a short-term or long-term loan.

The study of creditworthiness is carried out for a qualitative assessment of the borrower before deciding on the issuance of a loan and its conditions, determining the client’s ability and willingness to repay the borrowed funds in accordance with the loan agreement.

The study by banks of various factors that may lead to non-repayment of loans, or, on the contrary, ensure their timely repayment, constitutes the content of banking creditworthiness analysis.

When analyzing creditworthiness, banks must decide the following questions: is the borrower able to fulfill his obligations on time, is he ready to fulfill them?

The main purpose of such an analysis is to determine the ability and willingness of the borrower to repay the requested loan in accordance with the terms of the loan agreement. The bank must determine in each case the degree of risk it is willing to assume and the amount of credit that can be granted in the circumstances.

When contacting the bank, the borrower fills out a loan application.

The loan application contains the following basic information:

brief description of the borrower;

purpose of the loan;

information about the types of activities of the borrower;

loan size;

credit term;

intended collateral;

sources of loan repayment;

Contact Information;

passport details;

registration address;

Based on the data received, the bank evaluates the potential borrower.

One of the assessment methods is scoring.

In Russia, commercial banks use different scoring models for assessing the creditworthiness of an individual. When assessing individual indicators in a system of points, at the first stage a preliminary assessment of the possibility of issuing a loan is given, based on the data of the client’s test questionnaire. Based on the results of filling out the questionnaire test, the number of points scored by the borrower is determined and a protocol for assessing the possibility of obtaining a loan is signed. If the sum of points is less than 30, a refusal to issue a loan is recorded in the protocol. If the score is more than 30, at the second stage the risk is assessed more carefully, taking into account additional facts.

The need to use indicators follows from the definitions of the use of one or another selected accounting policy method:

When lending to individuals, loans are typically small in size, which creates a large amount of work to process them and a fairly expensive risk; 0 - for a high-risk profession, 0.16 - other professions;

financial indicators: presence of a bank account - 0.45, availability of real estate - 0.35; availability of an insurance policy - 0.19;

work: 0.21 - enterprises in the public sector, 0 - others;

employment: 0.059 - for each year of work at this enterprise. .

A threshold is also determined, after crossing which a person is considered to whom to give or not to give a loan. This kind of problem is solved with great success by one of the “Data Mining” methods - using decision trees. Decision trees are one of the methods of sequential structure, where each object corresponds to a single node that gives a solution.

A tree is built based on historical data. In this case, the class of each of the situations on the basis of which the tree is built is known in advance, i.e. it must be known whether they are in the same node or not. Entropy is zero if the node contains objects belonging to the same class.

The resulting model is used to determine the class (Give/Not give credit) of newly arisen situations (an application for a loan has been received).

If the current market situation changes significantly, the tree can be rebuilt if overdue debt arises. On this basis, a credit history is compiled.

In Russia, maintaining credit histories of borrowers is regulated by Federal Law No. 281-FZ “On Credit Histories,” which defines the conditions for the provision of credit reports and related services.

The Credit Conditions Bureau collects, processes and disseminates information related to the credit history of individual borrowers, information from state authorities, local governments and the Bank of Russia in order to verify information included in credit histories.

Credit history is information that characterizes the borrower’s fulfillment of its obligations under loan (credit) agreements and is stored in the credit history bureau.

A credit history bureau is a legal entity registered in accordance with the legislation of the Russian Federation, which is a commercial organization and provides services for the formation, processing and storage of credit histories, as well as for the provision of credit reports and related services.

2 Methods for assessing the creditworthiness of individuals

Assessing a borrower's credit risk usually means studying and assessing qualitative and quantitative indicators of the borrower's economic situation. Work on assessing credit risk in a bank is carried out in three stages:

The assessment of the client's creditworthiness is carried out on the basis of an analysis that is aimed at identifying objective results and trends in his financial condition.

The main sources of information for assessing the borrower's credit risk are: information provided by the borrower, the experience of other banks with this client, the scheme of the loan transaction, and on-site inspection data.

Qualitative analysis is also implemented in stages, as shown in Figure 1.

Figure 1 - Stages of qualitative analysis

The borrower's reputation is studied very carefully, and an analysis of the client's credit history, that is, past experience with the client's loan debt, is very important. Information characterizing the business and personal qualities of an individual borrower is carefully studied. The facts or absence of facts of non-payment of loans, etc. are also established. Determining the borrower's creditworthiness is an integral part of the bank's work to determine the possibility of issuing a loan.

Analysis of the borrower's creditworthiness means the bank's assessment of the borrower from the point of view of the possibility and feasibility of providing him with loans, determining the likelihood of their timely repayment in accordance with the loan agreement. For this purpose, various techniques and methods are used.

The analysis of the client’s creditworthiness is based on the collection of the necessary information that most fully characterizes the client, the main goals of the analysis of which are:

identifying the strengths of the applicant's situation;

identifying the weaknesses of a potential borrower;

determining which specific factors are most important for successful loan repayment;

possible risks when lending.

In banking practice, a distinction is made between direct and indirect methods for analyzing the creditworthiness of clients.

Direct methods are used quite rarely. They assume that the amount of points the customer accumulates actually equates to the loan amount for which he is entitled.

Indirect methods are widespread. Their essence is to assign certain weights (scores) to various assessment indicators, and the result of the assessment is to determine the client’s creditworthiness class.

Based on the data obtained, the creditworthiness group of the potential client is determined:

excellent borrower;

insolvent.

However, it is not enough to find out the borrower’s creditworthiness class. It is also important to determine the size and term of the loan to which he is eligible. To do this, use a table of acceptable amounts for issuing consumer loans as a percentage of the client’s annual income.

In the process of analyzing the individual creditworthiness of individuals, it is important to use the credit scoring method very carefully, since especially when issuing long-term loans, the situation during the execution of the loan agreement changes greatly and there may be a serious danger of non-repayment of the loan. If the total amount of points exceeds the amount specified in the model, then the bank provides the borrower with a loan, but if it is lower than the specified amount, then the loan is denied. Usually there is a certain gap between the minimum and maximum points, and when the actual number of points falls within this gap, the bank makes a lending decision based on general economic and legal factors.

It is obvious that the use of point systems for assessing the creditworthiness of clients is a more objective and economically sound decision-making process than the use of expert assessments. The only difficulty is that scoring systems for assessing a client's creditworthiness must be statistically carefully verified, and they require constant updating of information, which may be unprofitable for banks. According to the results of the creditworthiness analysis, the more points the client scores, the higher the level of his creditworthiness.

When analyzing creditworthiness, banks pay special attention to assessing the personal qualities of the borrower. They can request the necessary certificates, including from the borrower’s place of work, and check the accuracy of the information provided in the client’s application form. If the banker identifies inaccuracies in the client’s answers and comes to the conclusion that the potential borrower deliberately misled the bank, then the client is automatically denied a loan.

Equity assessment refers to determining the client's wealth. It is closely related to the assessment of the client's financial capabilities in terms of his ability to repay the loan along with normal day-to-day expenses and other debt obligations. For almost all consumer loans, the client's income is the main source of repayment. Therefore, the bank evaluates the adequacy of the client’s own funds to timely repay the loan after satisfying other claims and then compares this amount with the amount of periodic payments to repay the loan and interest on it.

Scoring

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Figure 2 - Example of a decision tree

The essence of this method is as follows:

1) a tree is built based on historical data. In this case, the class of each of the situations on the basis of which the tree is built is known in advance. In our case, it should be known whether the principal amount and interest were repaid and whether there were any delays in payments. When constructing a tree, all known situations of the training set first fall into the top node, and then are distributed among the nodes, which in turn can also be divided into child nodes. The partition criterion is different values ​​of any input factor. To determine the field by which the partition will occur, an indicator called entropy is used - measure of uncertainty . The field is selected whose partitioning eliminates more uncertainty. The higher the uncertainty, the more admixtures (objects belonging to different classes) are in one node. Entropy is equal to zero if the node contains objects belonging to the same class;

) the resulting model is used to determine the class (Give/Not give credit) of newly arisen situations (an application for a loan has been received);

) if the current market situation changes significantly, the tree can be rebuilt, i.e. adapt to the existing situation.

The study of methods for assessing the creditworthiness of individuals also makes it possible to identify problems that need to be solved at the macro level:

lack of special legislation regulating relations in the field of consumer lending (these relations are regulated by the laws “On Banks and Banking Activities” and “On the Protection of Consumer Rights”);

lack of a credit history system (which allows unscrupulous borrowers to obtain multiple loans from different banks without any verification of their previous loans);

employers still prefer “gray” schemes for paying remuneration to their employees (as a result, the borrower cannot officially confirm the declared level of income, and the bank loses a solvent client);

the absence of a simple mechanism for the bank to repay the loan in the event of the borrower’s insolvency (the cost of such errors is very high: loss of principal, legal and administrative costs, lost time, etc.);

the need for a reliable assessment of a potential borrower (incorrect classification gives rise to the problem of ensuring the repayment of funds by the borrower forcibly);

the lack of registration of pledged property opens up the opportunity for unscrupulous borrowers to sell or re-mortgage the pledged property;

the problem of assessing the real capabilities of guarantors (it is no secret that Russian banks sometimes solve the issue of reducing credit risks by simply transferring them to the borrower’s guarantors).

As you can see, today banks are in a disadvantageous position: they need to develop the consumer lending market, but this process is associated with too high risks, which are often transferred to borrowers, which does not stimulate demand for loans. In such a situation, banks that decide to develop this market must:

have consolidated information about clients, presented in a unified form and periodically updated with information from all branches of the bank (such a repository will serve as a credit bureau);

adapt the borrower classification model for your branches, which will allow you to take into account territorial characteristics and will further reduce risk. At the same time, the risk classification model must be periodically rebuilt taking into account new market trends.

Banks have their own experience for the development of lending to individuals, but the methods underlying them are too passive to adequately respond to market dynamics, and the proposed foreign solutions are too expensive - comparable in price to income from consumer lending in today's form. This is why loans are so expensive and the demand for them is so low. Increasing the reliability of information and reducing the cost of loans will allow us to abandon the practice of transferring risks and costs to borrowers. Then everyone will benefit: both banks and borrowers.

credit scoring risk borrower

2. Practical part

Ivan Borisovich Shevchenko applied to RGS Bank OJSC with a request for a consumer loan for apartment renovation in the amount of 250,000 rubles for a period of 36 months.

After consultation with a bank specialist, he was offered the “Your Conditions” loan program, the parameters of which are shown in Table 1.

Table 1 - Characteristics of the “Your Conditions” loan program

After the borrower completed the application form and provided all the necessary documents, the decision to issue a loan was approved at an annual rate of 14 percent.

Repaying the loan and paying interest using annuity payments. The loan is provided by crediting a deposit opened at the bank with the issuance of a bank card.

Full early repayment is carried out on the date stated by the client, partial early repayment is allowed on the date stated by the client.

No collateral is required and there are no program fees.

1) give a complete description of the loan;

2) list the documents required to provide a loan

) fill out the borrower's questionnaire;

) draw up a loan agreement;

) calculate the repayment schedule;

) make accounting entries for issuing a loan, creating a reserve, calculating interest, receiving (depositing) the first and second payments to the bank's cash desk (via a terminal), and the third payment through a card of another bank.

Table 2 - Full characteristics of the loan

Table 3 - Payment repayment schedule

Table 4 - Repayment schedule for payments of the 1st and 2nd order according to the timing of interest crediting

Table 5 - Journal of business transactions

Conclusion

Assessing the borrower's creditworthiness and the decision to issue a loan, made on the basis of the obtained values, is one of the ways to reduce the risk of bank lending.

One of the main tasks solved by a commercial bank during the process of lending to borrowers is the formation of a complete and reliable information base. It serves as the main source of information when analyzing the borrower's creditworthiness.

The analysis of the creditworthiness of individual borrowers is based on consideration of such indicators as:

the amount of initial capital;

the amount of income of the borrower and his family members;

balance of income and expenses of the borrower's family.

The main task of determining the creditworthiness of an individual borrower is to study his financial situation.

Creditworthiness is a comprehensive legal and financial characteristic of the borrower, represented by financial and non-financial indicators, which allows one to assess his ability in the future to fully and within the period stipulated in the loan agreement to pay off his debt obligations to the lender, and also determines the degree of risk of the bank when lending to a specific borrower .

Work on assessing credit risk in a bank is carried out in three stages:

) assessment of qualitative indicators of the borrower’s activities;

) assessment of quantitative indicators of the borrower’s activities;

) obtaining a summary assessment - forecast and forming a final analytical conclusion.

The study of issues related to the analysis of the creditworthiness of commercial bank borrowers allows us to conclude that the methods for analyzing the creditworthiness of individuals are based on generally accepted criteria: the nature of the client, the ability to borrow funds, the ability to earn funds to repay the debt in the course of current activities, the security of the loan, the legal capacity of the borrower. All these criteria determine how to assess the creditworthiness of bank clients.

The assessment of the borrower's creditworthiness by income level is carried out on the basis of data on the income of an individual and the degree of risk of losing this income. Income is determined based on salary certificates or tax returns, after which it is adjusted taking into account mandatory payments and bank risk ratios.

Scoring - used by banks a customer assessment system based on statistical methods. As a rule, this is a computer program into which the data of a potential borrower is entered. . In response, the result is given - is it worth providing him with a loan? . The name scoring comes from the English word score, that is, “account”.

Banks have their own experience for the development of lending to individuals, but the methods underlying them are too passive to adequately respond to market dynamics, and the proposed foreign solutions are too expensive - comparable in price to income from consumer lending in today's form. This is why loans are so expensive and the demand for them is so low.

The purpose of this course work was to study the procedure for assessing the creditworthiness of an individual.

In this work, the following tasks were solved:

1) the economic content of the concept of creditworthiness is considered;

) the methodological basis for assessing the creditworthiness of individuals has been studied;

) methods for assessing the creditworthiness of individuals were analyzed;

) the possibility of modernizing the process of assessing the creditworthiness of an individual was considered.

Thus, we can conclude that well-developed, tested and implemented methods for assessing creditworthiness have a positive impact on the lending process organized by the bank as a whole.

OJSC “RGS Bank” implements the “Your Conditions” loan program; when the borrower applied to the bank for a loan in the amount of 250,000 rubles for 36 months, a decision was made to issue a loan. The drawn up schedule of annuity payments showed that the final repayment amount will be 307,490 rubles 30 kopecks, including interest of 57,490 rubles 30 kopecks.

Bibliography

1. Federal Law of the Russian Federation dated July 10, 2002 No. 86-FZ “On the Central Bank of the Russian Federation (Bank of Russia)” (current version)

Federal Law “On Banks and Banking Activities” dated December 2, 1990 No. 395-1 (current version)

Endovitsky D.A., Bocharova I.V. Analysis and assessment of the borrower's creditworthiness. - “KnoRus”, 2008.

Kushuev A.A. Solvency and liquidity indicators in assessing the borrower’s creditworthiness // Money and Credit, No. 11, 2008. pp. 43-45.

5. O.I. Pyatkovsky, D.V. Lepchugov, V.V. Bondarenko. Scoring system for assessing the creditworthiness of individuals based on hybrid expert systems, Polzunovsky almanac No. 2, 2010, pp. 127-129.

Lending to individuals is characterized by small loan sizes, which generates a large amount of work to process them and a rather expensive procedure for assessing creditworthiness in relation to the resulting profit. In this case, credit risk consists of the risk of non-repayment of the principal amount of debt and interest on this amount.

To assess the creditworthiness of individuals, the bank needs to assess both the financial situation of the borrower and his personal qualities. At the same time, an assessment is made of qualitative and quantitative indicators of the borrower’s economic situation. The assessment should be carried out in three stages:

• 1) assessment of the qualitative indicators of the borrower’s activities;
• 2) assessment of quantitative indicators of the borrower’s activities;
• 3) obtaining a summary assessment - forecast and forming a final analytical conclusion.

The assessment of the creditworthiness of an individual is carried out on the basis of an analysis that is aimed at identifying objective results and trends in his financial condition. The main sources of information for assessing the borrower's creditworthiness are: financial statements, information provided by the borrower, the experience of other persons with this client, a diagram of the loan transaction with a feasibility study for obtaining a loan, and on-site inspection data.

Qualitative analysis is also implemented in stages:

• 2) determining the purpose of the loan;

The borrower's reputation is studied very carefully, and an analysis of the client's credit history, that is, past experience with the client's loan debt, is very important. Information characterizing the business and personal qualities of an individual borrower is carefully studied. The facts or absence of facts of non-payment of loans, etc. are also established.

Determining the borrower's creditworthiness is an integral part of the bank's work to determine the possibility of issuing a loan. Analysis of the borrower's creditworthiness means the bank's assessment of the borrower from the point of view of the possibility and feasibility of providing him with loans, determining the likelihood of their timely repayment in accordance with the loan agreement. For this purpose they use:

• - financial ratios;
• - cash flow analysis;
• - business risk assessment.

The basis of the analysis of the creditworthiness of an individual is the collection of the necessary information that most fully characterizes the client, the main goals of the analysis of which are:

• 1) identifying the strengths of the applicant’s situation;
• 2) identifying the weaknesses of a potential borrower;
• 3) determining which specific factors are most important for the borrower to continue to be successful;
• 4) possible risks when lending.

Credit officers' analysis of clients' financial statements takes two forms: internal and external. External analysis consists of comparing a given borrower with others. Internal analysis involves comparing different parts of financial statements with each other over a period of time over time.

Internal analysis is often called ratio analysis. Despite their importance for the analytical process, financial ratios have two disadvantages:

• 1) they do not provide information about how the client’s operations are proceeding;
• 2) present outdated information.

Therefore, a bank analyst has to work not only with factual data, but also with the assessment of “complex” information (views, assessments, etc.).

In most Western countries, the analysis of the creditworthiness of individuals is carried out in the following areas:

• 1) Personal capacity - personal qualities of a potential borrower (honesty, seriousness of intentions, characterization as a good employee, etc.).
• 2) Revenues - client’s income, analysis of total family income. In this case, it is believed that the client’s expenses for repaying the loan should not exceed a third of the client’s monthly income.
• 3) Material capacity - loan collateral, including analysis of the client’s movable and immovable property.

However, a more complete analysis is often required, for example, based on an assessment of the borrower's cash flow, that is, in the process of cash flow analysis. Cash flow is a measure of a borrower's ability to cover its expenses and repay debt with its own resources. Drawing up a cash flow statement allows you to answer the following questions:

• - whether the borrower provides himself with funds for further growth of financial assets;
• - whether the borrower’s growth is so rapid that it requires financing from external sources;
• - whether the borrower has excess funds to use for debt repayment or subsequent investment.

It is advisable to use this form of the borrower’s cash flow statement to analyze the prospects for repaying the loan. The initial information for assessing the client’s creditworthiness is a special section of the loan application - “Calculation of monthly income” (Table 1.1.)

Table 1.1. - Calculation of monthly income of an individual

By checking the client's disposable income and comparing it with the monthly debt service amount (principal and interest), the bank can easily determine the client's solvency. If the amount of debt service exceeds the amount of disposable income, then the client's application is rejected. The bank assesses the solvency of a potential borrower as good if the amount of debt service is less than 60% of its current expenses.

It is also necessary to evaluate the borrower's reputation. One of the possible methods for assessing it is the credit scoring method. The scoring model is usually developed by each bank independently based on the characteristics inherent to the bank and its clientele. The essence of this technique is that each factor characterizing the borrower has its own quantitative assessment. By summing up the scores obtained, you can obtain an assessment of an individual's creditworthiness. Each parameter has a maximum possible threshold, which is higher for important issues and lower for unimportant ones.

The scoring method allows for an express analysis of a loan application in the presence of the client. For example, in French banks, a client who applies for a personal loan and fills out a form can receive a response from the banker about the possibility of providing a loan within a few minutes.

Most American banks use in their practice:

• 1) systems for assessing the creditworthiness of clients, based on expert assessments of the analysis of the economic feasibility of providing a loan;
• 2) point systems for assessing the creditworthiness of clients.

Using peer-reviewed customer credit scoring systems, banks rely on a business-wide approach when analyzing a customer's creditworthiness. Banks analyze the information in the light of basic banking requirements and then decide whether to grant or refuse a loan. This approach to analyzing a client’s creditworthiness represents a balanced assessment of the borrower’s personal qualities and financial condition.

The use of a quantitative assessment of a client’s creditworthiness involves assigning a certain group to one or another type of loan, one or another type of borrower and determines in points the value of various characteristics of a potential borrower. The banker then simply tallies the total score and compares it to the pattern of granting or refusing a loan.

Scoring systems are created by banks based on an empirical approach using regression mathematical analysis or factor analysis. These systems use historical data on bank “good”, “reliable” and “poor” loans and allow determining the criterion level for assessing borrowers.

In banking practice, a distinction is made between direct and indirect methods for analyzing the creditworthiness of clients.

Direct methods are used quite rarely. They assume that the amount of points the customer accumulates actually equates to the loan amount for which he is entitled.

Indirect methods are widespread. Their essence is to assign certain weights (scores) to various assessment indicators, and the result of the assessment is to determine the client’s creditworthiness class.

Based on the data obtained, the potential client’s creditworthiness group is determined: excellent borrower; good; average; bad; insolvent. However, it is not enough to find out the borrower’s creditworthiness class. It is also important to determine the size and term of the loan to which he is eligible. To do this, use a table of acceptable amounts for issuing consumer loans as a percentage of the client’s annual income.

In the process of analyzing the individual creditworthiness of individuals, it is important to use the credit scoring method very carefully, since especially when issuing long-term loans, the situation during the execution of the loan agreement changes greatly and there may be a serious danger of non-repayment of the loan.

If the total amount of points exceeds the amount specified in the model, then the bank provides the borrower with a loan, but if it is lower than the specified amount, then the loan is denied. Usually there is a certain gap between the minimum and maximum points, and when the actual number of points falls within this gap, the bank makes a lending decision based on general economic and legal factors.

Today there are quite a lot of credit scoring methods known. One of the most famous is the Durand model. Durand identified groups of factors that make it possible to maximally determine the degree of credit risk. He also determined coefficients for various factors characterizing the creditworthiness of an individual:

• - gender: female (0.40), male (0);
• - age: 0.1 point for each year over 20 years, but not more than 0.30;
• - period of residence in a given area: 0.042 for each year, but not more than 0.42;
• - profession: 0.55 - for a low-risk profession; 0 - for a high-risk profession; 0.16 - other professions;
• - financial indicators: availability of a bank account - 0.45; availability of real estate - 0.35; availability of an insurance policy - 0.19;
• - work: 0.21 - enterprises in the public sector, 0 - others;
• - employment: 0.059 - for each year of work at this enterprise;

He also defined a threshold, after crossing which a person was considered creditworthy. This threshold is equal to 1.25, i.e. if the accumulated amount of points is greater than or equal to 1.25, then the potential borrower is given the amount he requested.

A significant disadvantage of the scoring system for assessing the creditworthiness of individuals is that it is very poorly adaptable. And the system used to assess creditworthiness must correspond to the current state of affairs. For example, in the USA it is considered a plus if a person has changed many jobs, which indicates that he is in demand. In the USSR, on the contrary, this circumstance indicated that a person either could not get along with the team, or was a low-value specialist, and accordingly, the likelihood of late payments increased. Another example of the difference in weighting coefficients is that if in the USSR the presence of a personal car indicated a good financial position of the borrower, now this presence means practically nothing. Thus, it is simply extremely necessary to adapt the model both for different periods of time, and for different countries, and even for different regions of the country.

Thus, two main disadvantages of the scoring system for assessing the creditworthiness of individuals can be identified:

• 1) the high cost of adapting the model used to the current state of affairs;
• 2) a high probability of a model error when determining the creditworthiness of a potential borrower, due to the subjective opinion of a specialist.

To adapt a scoring model for assessing the creditworthiness of individuals, it is necessary to determine a set of factors with weighting coefficients plus a certain threshold (value), over which a person applying for a loan is considered capable of repaying the requested loan and interest. However, the results obtained will be largely subjective opinions and, as a rule, poorly supported by statistics (statistically unsubstantiated). As a consequence of all this, the resulting model does not fully correspond to current reality. The financial result of this approach will be that in the lending interest rate offered by the bank, a large share will be occupied by the part that covers the risk of non-payment.

Thus, the use of point systems for assessing the creditworthiness of clients is a more objective and economically sound decision-making process than the use of expert assessments. The only difficulty is that customer credit scoring systems must be statistically carefully verified, and they require constant updating of information, which can be disadvantageous for banks. According to the results of the creditworthiness analysis, the more points the client scores, the higher the level of his creditworthiness.

When analyzing creditworthiness, banks pay special attention to assessing the personal qualities of the borrower. They can request the necessary certificates, including from the borrower’s place of work, and check the accuracy of the information provided in the client’s application form. If the banker identifies inaccuracies in the client’s answers and comes to the conclusion that the potential borrower deliberately misled the bank, then the client is automatically denied a loan.

Equity assessment refers to determining the client's wealth. It is closely related to the assessment of the client's financial capabilities in terms of his ability to repay the loan along with normal day-to-day expenses and other debt obligations. For almost all consumer loans, the client's income is the main source of repayment. Therefore, the bank evaluates the adequacy of the client’s own funds to timely repay the loan after satisfying other claims and then compares this amount with the amount of periodic payments to repay the loan and interest on it.

The coefficient method is a more detailed analysis of the economic condition of the borrower. Therefore, bankers around the world pay special attention to the analysis of financial ratios, for example, liquidity indicators, fund turnover, equity capital, profitability or cash flow, as a result of which the borrower’s creditworthiness class and its rating are determined.

To establish the amount of adequate coverage of credit risk for consumer loans, it is advisable to calculate special indicators, coefficients characterizing the minimum amount of payments to repay the loan and the maximum allowable amount of debt in relation to the client’s income:

K1 = Min/D, (1)

where Min is the minimum amount of payments to repay the loan

D - client income

K2 = Max / D, (2)

where Max is the maximum allowable amount of debt

Using such coefficients, the banker evaluates: the correspondence of the amount of income indicated in the questionnaire with the size of the client’s actual income, the stability of sources of income and determines the terms of loan repayment, taking into account the possibility of the borrower losing part of his income due to a decrease in overall business activity or a decrease in the competitiveness of this type of business, etc. .d.

Conclusion to subchapter 1.3: Summarizing the above, the analysis of the creditworthiness of an individual consists of determining the prospects for repayment of the amount of debt by the client on time and without additional expenses on the part of the bank.

Conclusion to Chapter I: Based on the results of studying the theoretical foundations of assessing the borrower’s creditworthiness, the following conclusions can be drawn:

1) Credit policy is the determination of the directions of the bank’s activities in the field of credit and investment operations and the development of lending procedures that ensure risk reduction. Developing a competent credit policy is the most important element of banking management. The essence of the bank's credit policy is to ensure the safety, reliability and profitability of credit operations, that is, the ability to minimize credit risk.

2) Banking risk is the risk to which commercial banks are exposed. Credit risk is very significant for banks. It represents the lender's risk of non-payment of principal and interest by the borrower. The most common measure in banks' practice aimed at reducing credit risk is assessing the borrower's creditworthiness.

3) A bank's assessment of the creditworthiness of a borrower - an individual - means an analysis of the possibility and feasibility of providing funds to the borrower, determining the likelihood of their return in a timely manner and in full. The scoring system for assessing potential borrowers is considered the most effective. It assumes the presence of at least three sections: information on the loan, information about the client, and the client’s financial situation. Thus, the assessment of the creditworthiness of an individual is carried out on the basis of an analysis that is aimed at identifying objective results and trends in his financial condition. The main sources of information for assessing the borrower's creditworthiness are: financial statements, information provided by the borrower, the experience of other persons with this client, a diagram of the loan transaction with a feasibility study for obtaining a loan, and on-site inspection data. Qualitative analysis is also implemented in stages:

• 1) studying the borrower’s reputation;
• 2) determining the purpose of the loan;
• 3) determining the sources of repayment of the principal debt and interest due;
• 4) assessment of the borrower’s risks assumed by the bank.

The borrower's reputation is studied very carefully, and analysis of the client's credit history, that is, past experience, is very important.