Asset represents all the assets of the bank, current and fixed, loan portfolio, investments and real estate owned as well as off balance sheet transactions.
Rating factors:
Asset quality is based on the following considerations:
· Volume of problem of all assets.
· Volume of overdue or rescheduled loans.
· Ability of management to administer all the assets of the bank and to collect problem loans.
· Large concentrations of loans and insiders loans, diversification of investments.
· Loan portfolio management, written policies, procedures internal control,
· Management Information System.
· Loan Loss Reserves in relation to problem credits and other assets.
· Growth of loans volume in relation to the bank’s capacity.
Asset quality rating 1:
Asset quality rating “1” is characterized by:
· Ratio of troubled assets to capital is less than 2% or 3%.
· Past due and extended loans kept under control by a specific unit, in accordance with the law.
· Concentrations of credits and loans to insiders provide minimal risk.
· Efficient loan portfolio management, close monitoring of problem loans.
· Adequate Loan Loss Reserves in accordance with CBI’s regulations.
· Non credit assets pose no loss threat.
Asset quality rating 2:
Asset quality rating “2” is assigned to banks that display similar characteristics as “1”, but are experiencing non significant weaknesses, and the management is able to address these issues without close regulatory oversight.
Problem assets do not exceed 10 % of total capital, but:
· The bank is experiencing negative trends in the level of overdue and prolonged credits and of LLR
· There are weaknesses in the management underwriting standards and control procedures
· Loans to insider pose some regulatory concern, but can be easily corrected
· Return on non credit assets is low and they display more than normal risk without posing a threat of loss
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Rating factors:
Asset quality is based on the following considerations:
· Volume of problem of all assets.
· Volume of overdue or rescheduled loans.
· Ability of management to administer all the assets of the bank and to collect problem loans.
· Large concentrations of loans and insiders loans, diversification of investments.
· Loan portfolio management, written policies, procedures internal control,
· Management Information System.
· Loan Loss Reserves in relation to problem credits and other assets.
· Growth of loans volume in relation to the bank’s capacity.
Asset quality rating 1:
Asset quality rating “1” is characterized by:
· Ratio of troubled assets to capital is less than 2% or 3%.
· Past due and extended loans kept under control by a specific unit, in accordance with the law.
· Concentrations of credits and loans to insiders provide minimal risk.
· Efficient loan portfolio management, close monitoring of problem loans.
· Adequate Loan Loss Reserves in accordance with CBI’s regulations.
· Non credit assets pose no loss threat.
Asset quality rating 2:
Asset quality rating “2” is assigned to banks that display similar characteristics as “1”, but are experiencing non significant weaknesses, and the management is able to address these issues without close regulatory oversight.
Problem assets do not exceed 10 % of total capital, but:
· The bank is experiencing negative trends in the level of overdue and prolonged credits and of LLR
· There are weaknesses in the management underwriting standards and control procedures
· Loans to insider pose some regulatory concern, but can be easily corrected
· Return on non credit assets is low and they display more than normal risk without posing a threat of loss
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