Credit Risk Analyst

Responsibility:

Preparation and timely submission of all credit related compliant statement , i.e. CIB,
CL, monthly statement, quarterly statement, half yearly statement, annual
statement, CTR etc., to Bangladesh Bank & other regulatory authorities.
Maintenance and monitor SBS-3 (schedule bank statistic) report as per central bank
guideline.
Credit MIS including inter-divisional position.
Ensure CIB Correction Database and maintain related correspondence with
Bangladesh Bank.
Ensure proper sanction, disbursement, adjustment, closing & renewal of SOD against
financial obligations.
Track and monitor implementation of all disbursement functions related audit
recommendations.
Monitor and ensure completeness of all disbursement related documentations.
Placing Note / Memo to the Board for different loan accounts if found incomplete
documents / Overdue / Expired etc.
Ensure rectification of irregularities as detected by Internal Control & Compliance
Division.
Responsible for preparing of documents on contracts of loan and payment schedule.
Monitoring and follow-up of the exceptional loan accounts reviewing periodical
statements.
Ensure supervision & control over stocks under pledge/LIM, security/collaterals,
insurance policy etc. by continuous checking.
To ensure that all risks related to Loan Administration are identified and also
documented.
Maintain zero tolerance of any attempt of fraudulence activities.
Establishing service level agreements which minimize disputes in terms of credit
compliance issues.
Communicate with business person to solve documentation query.
Release of securities and collateral.
Perform responsibilities of checking loan application documents for further
processing.
UAT: - Actively involved in core banking UAT: worked in UAT till Go-live.

Short Question
1. Question: What are the steps and processes you follow for considering credit to a
customer?
Answer: The analysts job is to analyze customers, as well as the market. The analyst
must know how safe the playing habits of the client are. The analyst studies
customer records and meets customers regarding various issues.
2. Question: What characteristics are most important to be successful as a credit
analyst?
Answer: It may sound obvious, but it must be stressed: analytical thinking is vital to
ones success as a credit analyst. Professionals in this field do a lot of evaluating;
they study customer records, meet clients in person, and become familiar with their
history and habits. Analysts must be able to put all these together and decide if it is
productive for the company to extend credit in this case.
3. Question: What is the role of interpersonal and communication skills in the career
of a credit analyst?
Answer: Interpersonal communication is crucial to realizing your full potential as a
credit analyst. A credit analyst communicates regularly with internal and external
business representatives regarding credit information. He/she also meets clients in
person to answer queries, solve problems, respond to complaints, etc.
4. Question: Are you skilled in financial analysis?
Answer: Financial analysis is part of the job. Analysts must understand things like
financial and cash-flow statements, market share, management accounts, income
growth, etc. They are required to generate financial ratios to understand a
customers financial situation.
5. Question: Are you proficient with relevant financially-oriented software and
technology?
Answer: Professionals are typically required to use specialized software to perform
things like generating financial ratios and developing statistical models to assess and
predict information. Mentioning your ability to use computers in general for related
activities such as market research is also relevant.
6. How would you determine financial risk of a company? With ratios would you use?
7. What do you look at to assess a company's credit worthiness (always mentioned
financial metrics as well as the industry, economy, and political environment (fear of
expropriation? harmful legislation?)).
8. What is the concept of Free Cash Flow?
Free cash flow (FCF) represents the cash that a company is able to generate after laying out
the money required to maintain or expand its asset base. Free cash flow is important
because it allows a company to pursue opportunities that enhance shareholder value.

9. What is terminal value?

The value of a bond at maturity, or of an asset at a specified, future valuation date, taking into
account factors such as interest rates and the current value of the asset, and assuming a stable
growth rate. In addition to bond and asset applications, terminal value can also refer to the

value of an entire company at a specified future valuation date. Two common approaches are
used to evaluate the terminal value of an asset: the "perpetuity growth model" and the "exit
approach."

10. What according to you would be a safe Debt/Equity ratio?

11. Tell me the various parameters to decide if you can lend $10million to a company
12. Tell me an effective method you would have used to generate financial ratios and
gauge customers financial status.
13. What does a Credit Rating agency do?
A credit rating agency (CRA, also called a ratings service) is a company that assigns credit
ratings, which rate a debtor's ability to pay back debt by making timely interest payments
and the likelihood of default. An agency may rate the creditworthiness of issuers of debt
obligations, of debt instruments, and in some cases, of the servicers of the underlying debt,
but not of individual consumers.

14. What are the current Treasury Rate, LIBOR and CRR?
15. What methods do you use to compare the liquidity, profitability, and credit histories
of corporations?

1. In a bank's credit analysis of a business loan application, typical uses of financial

ratios would include:
A) a cross-sectional analysis of ratios, with other firms.
B) a time series analysis of ratios, with the applicant's
historical ratios.
C) a ratio analysis conducted by Federal banking
authorities.
D) All of the above
E) (a) and (b)
2. When a lending institution is trying to assess whether a borrowing firm's
management is trustworthy, it is focusing on which of the "Five Cs"?
A. Character
B. Capacity
C. Capital
D. Collateral
E. Conditions
3.
A.
B.
C.
D.

A "common size" analysis implies:

comparing firms having the same asset size.
comparing firms having the same stockholders' equity
expressing income statement items as a percentage of sales.
expressing balance sheet items as a percentage of total assets.

E. (c) and (d)

4.
A.
B.
C.
D.
E.

Which of the following would be viewed as "liquidity ratio"?

current assets/current liabilities
debt/net worth
debt/total assets
sales/total assets
b and c

5.
A.
B.
C.
D.
E.

"EBIT" is a/an:
balance sheet item, found among the assets.
income statement item, relating to earnings.
balance sheet item, found among the liabilities.
income statement item, found among the operating expenses.
balance sheet item, found among the stockholders' equity items.

6.
A.
B.
C.
D.
E.

A bond with a high degree of credit risk would:

be more liquid
be a junk bond
be priced to give a lower yield
be selling for a higher price
c and d

7. One particular approach to credit risk modelling is based on the idea that a
borrowing firm holds a valuable default or repayment option. This is:
A. the RAROC model
B. Altman's Z-score model
C. the "common size" model
D. the KMV model
E. the ratio model

Consider the following data, for a given firm:

Total assets
Current assets
Current liabilities
Long-term debt (book)
Total stockholders' equity (book)
Retained earnings
Sales
EBIT
Market value of equity

$100 million
40 million
35 million
50 million
15 million
10 million
150 million
8 million
30 million

8.
A.
B.
C.
D.
E.

Compute Altman's Z-score for this firm.

0.82
2.32
4.20
3.73
2.09

9. Of the following Z-scores, which would suggest the highest probability of

bankruptcy?
A. .70
B. 1.80
C. 3.00
D. 3.60
E. 4.20

Consider the following financial statement data submitted in conjunction with a loan
request.
Current assets
$1.2 billion
Current liabilities
1.5 billion
Total assets
3.8 billion
Total liabilities
2.2 billion
Sales
4.2 billion
Cost of goods sold
1.9 billion
Net income
0.85 billion
10. What is the firm's "gross profit"?
A. $2.3 billion
B. $1.6 billion
C. $0.85 billion
D. $3.8 billion
E. $6.1 billion

11. Consider the following financial statement data submitted in conjunction with a loan
request.
Current assets
Current liabilities
Total assets
Total liabilities
Sales

$1.2 billion
1.5 billion
3.8 billion
2.2 billion
4.2 billion

Cost of goods sold

Net income

1.9 billion
0.85 billion

12. Compute the firm's "gross margin."

A. 0.202
B. 0.250
C. 0.548
D. 0.452
E. 0.676

Consider the following financial statement data submitted in conjunction with a loan
request.
Current assets
$1.2 billion
Current liabilities
1.5 billion
Total assets
3.8 billion
Total liabilities
2.2 billion
Sales
4.2 billion
Cost of goods sold
1.9 billion
Net income
0.85 billion
13. Compute the firm's "return on equity."
A. -0.188
B. 0.224
C. 0.531
D. 0.202
E. 0.654

Consider the following financial statement data submitted in conjunction with a loan
request.
Current assets
Current liabilities
Total assets
Total liabilities
Sales
Cost of goods sold
Net income

$1.2 billion
1.5 billion
3.8 billion
2.2 billion
4.2 billion
1.9 billion
0.85 billion

14. Compute the firm's "debt to asset" ratio.

A. 0.367
B. 0.536
C. 0.224
D. 1.467
E. 0.579

15. Information in the text suggests that in the early 2000s, _______________ provided
superior warning signs about the deteriorating financial condition at Worldcom,
when compared to the S&P ratings.
A. the total debt/net worth ratio
B. Fitch Investors
C. the gross profit margin
D. the KMV model
E. the current ratio
16. Some borrowers may be required by their lenders to hold a/an _________________,
which is a percentage of the loan amount that must be kept on account at the
lending institution.
A. reserve requirement
B. net worth requirement
C. compensating balance
D. collateral account
E. letter of credit
17. One model, pioneered by Bankers Trust, computes a loan's rate of return by dividing
expected one-year loan income by the loan's value at risk. This approach is the:
A. KMV model
B. required reserve model
C. compensating balance model
D. Altman's Z-score model
E. RAROC model
18. When a bank's credit analysis focuses on the assets offered by the loan applicant as
security for a loan, which of the "Five Cs" is being assessed?
A. Character
B. Capacity
C. Capital
D. Collateral
E. Conditions
19. Jane is applying for a mortgage loan. The monthly payment on the proposed loan will
be $784. Annual property taxes for the property are $3,340. Jane's gross monthly
income is $5,250. What is the "gross debt service" ratio?
A. 78.6%
B. 14.9%
C. 20.2%

D. 5.3%
E. 21.4%