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Basic credit analysis

Course objective

By the end of this course, participants will:

    1. Understand the nature of financial risk, how and why banks take risk, and how it is measured;
    2. Appreciate how "Top Down" analysis and detailed financial and credit analysis of the borrower interrelate;
    3. Know how to read and understand "normal" financial statements, and to apply that understanding to the objectives of their credit analysis of a borrower;
    4. Determine the relationship between credit analysis and the type of facility to be recommended, and the key issues in determining what documentation and security should support that facility; and
    5. Know what to do after the transaction has been approved, documented and drawn down.

Course duration
Four days

Andrew McRobert, or presenter trained by him. An abbreviated curriculum vitae of Andrew McRobert can be viewed here.

Course agenda
A copy of the 'standard' course agenda is attached herewith. The course has been designed in a series of modules. In respect of each country in which it is presented, a number of changes are made to the 'standard' model, in order to make it country specific:

    1. References to mandatory accounting policies are changed to reflect the current position in the country;
    2. Reference is made to the financial statements of a company in the country in question in the "Reading & understanding financial statements" segments; and
    3. Selected industries operating in the country where the course is being run are discussed in the "Top Down credit analysis" section.

In addition, the course may be amended, if required, as follows:

    1. Substitution of case studies drawn from the financial institution's own portfolio;
    2. Inclusion of additional material on topics of particular interest to a specific financial institution; and
    3. Any other modifications that a client considers necessary.

Basic Course Agenda



Topics Case Study
Day 1 AM Introduction to credit (1)

Risk, credit & lending: what business are lenders in, and why?

Risk/reward & relevance to lending propositions

Tricks & traps of specialised lending

Each section of this course will be supported by case studies and exercises drawn either from the presenter’s international banking experience. Some of these case studies and exercises will use companies from the country where the course is being presented, others will draw on credit concepts and applications that are in use in or relevant to the credit environment in that country
Day 1 PM Introduction to credit (2) "Top Down" credit analysis: does the borrower have a sustainable operating business?

Understanding the competitive environment

Day 2 AM Reading & understanding financial statements revisited Basic concepts, double entry accounting, balance sheet, profit & loss statement, notes to the accounts, cash flow analysis, ratio analysis
Day 2 PM Applying principles to lending transactions Defining the target market

Initial reviews of potential transactions & the pipeline

Collection of detailed information to support the credit proposal

Preparation and submission of the credit proposal

The credit approval process

Day 3 AM

Types of finance

Documentation and collateral

Specialised lending

Review of lending products

Matching the product to the client need

Matching the documentation to the transaction

Analysis and valuation of collateral

Understanding the valuation of specialised collateral

Day 3 PM Post transaction management

After the deal is done

Portfolio management, review, reporting & follow-up

Warning signals of potential failure

Annual review

contact details

South Africa: +27 82 447 4256

Australia: +61 402 048 326