《个人及商业信贷》PPT课件.ppt

PersonalandCommercialLending FangMing 方明 027 62681061fxlasting TeachingContents PersonalandCommercialLending AnIntroductionPersonalandCommercialLending Advanced ThisUnitisdesignedtoenablecandidatestounderstandtheprinciplesandproductsthatapplywhenlendingtopersonalandcommercialborrowers Itpreparesthecandidateforpracticallendingsituationsthatwouldariseinthebankingandrelatedfinancialservicesindustriesandisrelevanttocandidateswithnoexperienceortothosewhohavealimitedexperienceinlending Unitpurpose Assessment ItispreferredthatthisUnitbeassessedbyaninstrumentofassessmentthatwouldrequirecandidatestoanswerquestionsbasedonacasestudyrelatingtoapersonalandcommerciallendingsituation Section1 1ImportanceofLendingpracticeMainsourceprofitoffinancialinstitutionsRiskofnonpaymentFundsentrustedtoafinancialinstitutionbydepositors principalandagentrelationship moralhazardResponsibilitytoprotecttheinvestmentofshareholdersoffinancialinstitutionsLegalimplications 2Asystematicapproachtolending2 1IntroductionstageNon customersExistingcustomers 2 2Theapplicationform2 3ReviewingtheapplicationCAMPARICCCPARTSPARSERS2 4Evaluation2 5MonitoringandContol Section2 1Principleoflending1 1Personalaspectscharacter integrity honestyandreliabilitycapitalcapability 1 2AmountandpurposeFiscalorgovernmentdirectives orstrategicreasonPersonalcustomer theabilitytorepaytheloanBusinesscustomer supportingevidence 1 3RepaymentNatureoftheloanandinterest1 4Safetyshortandmedium termpersonalborrowingisunsecuredMaindangertotherepaymentbyregularsalaryisredundancyandillness 1 5ExpediencyOccasionallydecisionsonlendingaremadethatdonotalwaysfollowanexpectedpattern1 6RemunerationInterestCommission1 7Selling 2Personalinformationrelevanttopersonallending 3 ImportanceofsourceandtimingofincomeinrelationtopersonallendingSalaryOvertimepayments bonuses commissionsTimingoflending Section3 5 3 1RestrictionsonlendingLegalrestrictionsCreditratingrestrictionsThelender spolicy 5 3 2AdditionalFactorsRelatingtoPersonallendinglendingtojointapplicantslendingtoyoungpersonslendingtotrusteeslendingtoexecutors 5 3 3PersonallendingSources1Theprovider 2MethodsofdeliveryDirectsalesPostallendingElectronicsaleRegulatoryaspectsofloansales Section4 5 4 1TheproductsShort termborrowinga Overdraftfeaturesofoverdraftsb creditcardfeaturesof creditcard 5 4 2Medium termborrowingPersonalloansSecuredpersonalloansStudentsLoansGraduates OverdraftsCareerDevelopmentLoansExecutorLoans Section5 5 5 1Long termborrowingWhatisMortgage Amortgageisaloanyoutakeouttobuyproperty Mostbanksandbuildingsocietiesoffermortgages aswellasspecialistmortgagelendingcompanies Ifyouchangelendersbutdon tmovehomeit sreferredtoasa remortgage Concernedparties MortgagorMortgagee Repaymentmethods Thetwomainwaystorepayyourmortgageare repayment and interestonly Witharepaymentmortgageyoumakemonthlyrepaymentsforanagreedperiod the term untilyou vepaidbacktheloanandtheinterest Withaninterestonlymortgageyoumakemonthlyrepaymentsforanagreedperiodbutthesewillonlycovertheinterestonyourloan endowmentmortgagesworkinthisway You llnormallyalsohavetopayintoanothersavingsorinvestmentplanthat llhopefullypayofftheloanattheendoftheterm MortgagetypesCapitalandinterestmortgagesInterest onlyrepaymentmortgages 5 5 2OtherloansBridgingloans Section6 5 6 1InterestratesFlatratesAPR InterestandInterestRates SomebasicinformationoninterestratesBankofEnglandbaserateSetbyMonetaryPolicyCommitteeProvidesabasisforotherratesNo onecantradeatalowerrate arbitrage ObjectivesoftheMPCTocontroltherateofinflation targetband IncreaseininterestratereducesdemandReductionininterestratestimulatesdemandBasedecisionsoneconomicdata OtherImportantRates LIBOR LondonInterbankOfferedRateTherateatwhichbanksarewillingtolendtoeachotherThebasisformanyfinancialcalculationsMortgageratesMortgagesarethesafestformoflendingtoindividualsohavelowestinterestratesMarketrateisdeterminedbycompetitionbetweenlenders OtherImportantRates PersonalloansLoansforpurchasesotherthanproperty morerisk HigherinterestratethanmortgagesMorevariationininterestratesthanformortgagesCollateralSecuredloan anassetisheldascollateralUnsecuredloan nocollateralInterestrateisloweronasecuredloan InterestRateCalculations Tounderstandinterestrates needtogosomethroughsomebasiccalculationsInterestiscompoundedataspecifiedintervalTheintervalcanmakeadifferenceAssumeintervalisoneyearThenborrowing 100atarateof10 foroneyearimpliesatotalrepaymentof CompoundingInterval NowconsiderwhathappensifwecompoundinterestmorefrequentlyIfevery6months thenrateof10 forayearbecomes5 forsixmonthssoIfcompoundedevery3monthsThegeneralformulaforinterestatratercompoundedmtimesayearfornyearsonaloanofLis ContinuousInterest Continuousinterestisthelimitofmorefrequentcompounding Effects Thedifferencebetween 110and 110 52mayseemsmallItisequivalentto0 52 ontheannually compoundedinterestrateof10 OnalargeloanthiscouldbesignificanteffectCompoundingperiodMattersforrepaymentNeedstobeclarifiedbeforealternativeloanscanbecompared FlatRateInterest InterestcanalsobequotedasaflatrateConsider 100borrowedfor5years withaflatrateofinterestof10 Thismeans 10ofinterestispaidperyearOver5yearsthetotalpaymentsontheloanare 10 10 10 10 10 100 150Therepaymentstructureis5paymentsof 30ThisisequivalenttoanAPRof15 2 seelaterorusemortgagecalculation AnnualPercentageRate ThesecompoundingissuesmotivatetheneedtofindastandardofcomparisonThegovernmenthaschosentousetheAnnualPercentageRate APR Thisinterestrateconvertsanyinterestschedule suchastheflatrate totheannualequivalentAnnualPercentageRate AnnualPercentageRate ConsiderreceivingmpaymentsAkattimestkandmakingnpaymentsAk attimestk TheinterestratethatmakesthepresentdiscountedvalueofbothflowsequalsolvesThesolutionrtothisequationistheAPR Example1 Receive 100att1 0Pay 10att1 1 pay 110att2 2Solutionisr 10 Thisisjustastandardloanat10 interest Example2 Receive 100att1 0 receive 50att2 1 5Pay 90att1 1 pay 80att2 2Solutionisr 13 5 Howisthisfound DrawagraphTrialanderror Example2 Example3 Flatrateinterestof10 100isreceivedattime0Fivepaymentsof 30aremadeTheAPRsolvesThesolutionis15 2 asclaimedearlier Example3 Comparison TheAPRisquotedwithalladvertsforloansItisasimplemeansofcontrastingtheratesonloanswithdifferentstructures 5 6 2CreditscoringScorecardsAdvantagesofScorecardsBehavioralscoring 5 6 3Theuseofexternalcreditreference Section7 5 7 1Theneedforsecurity 5 7 2Typesofsecurity 5 7 3securitymargin1 cash2 land3 securities4 lifepolicies5 thirdsecurity6 Securitytakenagainstanirrevocablemandate Section8 5 8 1ProtectionproductsTheneedforprotection1 Loanrepaymentinsurance2 Lifeassurances3 Buildingsandcontentsinsurance Section9 5 9 1CommercialLendingLendingtocommercialcustomerstakethesamelendingprinciplesaspersonallendingMorefinancialinformationbeforemeetingCarefulconsiderationofcommerciallending Thebusinessplan ExecutiveSummaryMarketAnalysisCompanyDescriptionOrganizationandManagementMarketingandSalesStrategyServicesandProductsFunding Financing RequirementsFinancialInformationAppendices Section10 5 10 1RestrictionsonLendingtoBusinessesRestrictionson ThetypesofloansThetypesofcustomersBorrowerLegalRestrictions 5 10 2FinancialinformationItistoassessthetruefinancialposition operatingperformanceandcashflow Oneimportantinformationsource BankRecordsIncluding Turnover Revenue BankbalancesStandingorderanddirectdebitsDetailsofunpaiditemsCharges 5 10 3BusinessStructureSoletrader Singleproprietorship PartnershipLimitedcompany Section11 5 11 1TheManagementTeamThesuccessorfailureofabusinessoftencomesdowntothequalityofthemanagementteam Sothestrengthsandweaknessesofthemanagementteam 5 11 2TheUseofAnnualAccountsThechairman sstatementThedirectorsreportTheprofitandlossaccountAbalancesheetThecashflowstatementAuditor sreportNotestotheaccountsAsatementoftotalrecognisedgainsandlosses Section12 5 12 1ManagementAccountsAlternativeinformationsourcetothebalancesheetandaprofitandlossaccount FormanagementdecisionmakingandwithnogenerallyacceptedprinciplesThemainemphasisofmanagementaccountsisinprovidinguseful timely detailedandresonablyaccurateinformationfordecision makingTotaketheindividualpartsordivisionsofabusinessasobjectsratherthanthewholebusiness 5 12 2ProfitBudgetsandCashFlowForecastsItisanestimateofthefutureprofitreturnsfromfuturetrading Cashflowforecast futureexpenditure incomeandshortfallfinancingItisbasedontheshortandlonger termobjectives ElementsofFinancialPlanning Investmentinnewassets determinedbycapitalbudgetingdecisionsDegreeoffinancialleverage determinedbycapitalstructuredecisionsCashpaidtoshareholders dividendpolicydecisionsLiquidityrequirements determinedbynetworkingcapitaldecisions RoleofFinancialPlanning Examininginteractions helpsmanagementseetheinteractionsbetweendecisionsExploringoptions givesmanagementasystematicframeworkforexploringitsopportunitiesAvoidingsurprises helpsmanagementidentifypossibleoutcomesandplanaccordinglyEnsuringFeasibilityandInternalConsistency helpsmanagementdetermineifgoalscanbeaccomplishedandifthevariousstated andunstated goalsofthefirmareconsistentwithoneanother FinancialPlanningModelIngredients SalesForecast manycashflowsdependdirectlyonthelevelofsales oftenestimatedusingagrowthrateinsales ProFormaStatements settinguptheplanasprojectedfinancialstatementsallowsforconsistencyandeaseofinterpretationAssetRequirements howmuchadditionalfixedassetswillberequiredtomeetsalesprojectionsFinancialRequirements howmuchfinancingwillweneedtopayfortherequiredassetsPlugVariable managementdecisionaboutwhattypeoffinancingwillbeused makesthebalancesheetbalance EconomicAssumptions explicitassumptionsaboutthecomingeconomicenvironment Example HistoricalFinancialStatements Example ProFormaIncomeStatement InitialAssumptionsRevenueswillgrowat15 2000 1 15 AllitemsaretieddirectlytosalesandthecurrentrelationshipsareoptimalConsequently allotheritemswillalsogrowat15 Example ProFormaBalanceSheet CaseIDividendsaretheplugvariable soequityincreasesat15 Dividends 460NI 90increaseinequity 370CaseIIDebtistheplugvariableandnodividendsarepaidDebt 1 150 600 460 90Repay400 90 310indebt PercentofSalesApproach Someitemstendtovarydirectlywithsales whileothersdonotIncomeStatementCostsmayvarydirectlywithsalesIfthisisthecase thentheprofitmarginisconstantDividendsareamanagementdecisionandgenerallydonotvarydirectlywithsales thisaffectstheretainedearningsthatgoonthebalancesheetBalanceSheetInitiallyassumethatallassets includingfixed varydirectlywithsalesAccountspayablewillalsonormallyvarydirectlywithsalesNotespayable long termdebtandequitygenerallydonotbecausetheydependonmanagementdecisionsaboutcapitalstructureThechangeintheretainedearningsportionofequitywillcomefromthedividenddecision Example IncomeStatement AssumeSalesgrowat10 DividendPayoutRate 50 Example BalanceSheet Example ExternalFinancingNeeded Thefirmneedstocomeupwithanadditional 200indebtorequitytomakethebalancesheetbalanceTA TL OE 10 450 10 250 200ChooseplugvariableBorrowmoreshort term NotesPayable Borrowmorelong term LTDebt Sellmorecommonstock CS APIC Decreasedividendpayout whichincreaseAdd ToRE Example OperatingatLessthanFullCapacity Supposethatthecompanyiscurrentlyoperatingat80 capacity FullCapacitysales 5000 8 6 250Estimatedsales 5 500 sowouldstillonlybeoperatingat88 Therefore noadditionalfixedassetswouldberequired ProformaTotalAssets 6 050 4 000 10 050TotalLiabilitiesandOwners Equity 10 250ChooseplugvariableRepaysomeshort termdebt decreaseNotesPayable Repaysomelong termdebt decreaseLTDebt Buybackstock decreaseCS APIC Paymoreindividends reduceAdd ToRE Increasecashaccount GrowthandExternalFinancing Atlowgrowthlevels internalfinancing retainedearnings mayexceedtherequiredinvestmentinassetsAsthegrowthrateincreases theinternalfinancingwillnotbeenoughandthefirmwillhavetogotothecapitalmarketsformoneyExaminingtherelationshipbetweengrowthandexternalfinancingrequiredisausefultoolinlong rangeplanning TheInternalGrowthRate Theinternalgrowthratetellsushowmuchthefirmcangrowassetsusingretainedearningsastheonlysourceoffinancing TheSustainableGrowthRate Thesustainablegrowthratetellsushowmuchthefirmcangrowbyusinginternallygeneratedfundsandissuingdebttomaintainaconstantdebtratio DeterminantsofGrowth Profitmargin operatingefficiencyTotalassetturnover assetuseefficiencyFinancialleverage choiceofoptimaldebtratioDividendpolicy choiceofhowmuchtopaytoshareholdersversusreinvestinginthefirm Section13 5 13 1FinancialAppraisalThreemainareas limitedinHNDtextbooks FinancialstructureLiquidityProfitability Financialstructure Gearing Assets Capitalthatisinjectedintothebusiness Equity DebtTherelationshipbetweenequityanddebtisimportant whichdecidestheborrowingpotentialandtheablitytorepaythecommercialloans Capitalgearingratio CapitalGearingRatio Liability Owner equityAninvestmentratiothatcomparestheborrowingmadebyacompanywiththefinancecontributedbytheshareholders Capitalgearingratioismainlyusedtoanalyzethecapitalstructureofacompany Thetermcapitalstructurereferstotherelationshipbetweenthevariouslong termformoffinancingsuchasdebentures preferenceandequitysharecapitalincludingreservesandsurpluses Leverageofcapitalstructureratiosarecalculatedtotestthelong termfinancialpositionofafirm Capitalgearingratioisimportanttothecompanyandtheprospectiveinvestors Itmustbecarefullyplannedasitaffectsthecompany scapacitytomaintainauniformdividendpolicyduringdifficulttradingperiods Itrevealsthesuitabilityofcompany scapitalization InterestCoverRatio Itisimportanttopaytheinterestlendingonanylending InterestCoverageRatio NetProfitBeforeInterestandTax FixedInterestCharge Interestcoverratioisalsoknownasdebtserviceratioordebtservicecoverageratio Thisratiorelatesthefixedinterestchargestotheincomeearnedbythebusiness Itindicateswhetherthebusinesshasearnedsufficientprofitstopayperiodicallytheinterestcharges Itiscalculatedbyusingtheaboveformula Theinterestcoverageratioisveryimportantfromthelender spointofview Itindicatesthenumberoftimesinterestiscoveredbytheprofitsavailabletopayinterestcharges Itisanindexofthefinancialstrengthofanenterprise Ahighdebtserviceratioassuresthelendersaregularandperiodicalinterestincome Buttheweaknessoftheratiomaycreatesomeproblemstothefinancialmanagerinraisingfundsfromdebtsources Liquidity Thetrueliquidityreferstotheabilityofafirmtopayitsshorttermobligationsasandwhentheybecomedue Thetwocomponentsofliquidityareliquidassetsandliquidliabilities Liquidassetsnormallyincludecash bank sundrydebtors billsreceivableandmarketablesecuritiesortemporaryinvestments Inotherwordstheyarecurrentassetsminusinventories stock andprepaidexpenses Inventoriescannotbetermedasliquidassetsbecauseitcannotbeconvertedintocashimmediatelywithoutalossofvalue Inthesamemanner prepaidexpensesarealsoexcludedfromthelistofliquidassetsbecausetheyarenotexpectedtobeconvertedintocash Similarly Liquidliabilitiesmeanscurrentliabilitiesi e sundrycreditors billspayable outstandingexpenses shorttermadvances incometaxpayable dividendspayable andbankoverdraft onlyifpayableondemand Sometimebankoverdraftisnotincludedincurrentliabilities ontheargumentthatbankoverdraftisgenerallypermanentwayoffinancingandisnotsubjecttobecalledondemand Insuchcasesoverdraftwillbeexcludedfromcurrentliabilities AssetsLiabilityFundingtrends Profitability GrossProfitMarginWhatremainsfromsalesafteracompanypaysoutthecostofgoodssold Toobtaingrossprofitmargin dividegrossprofitbysales Grossprofitmarginisexpressedasapercentage Forexample ifacompanyreceives 25 000insalesanditscostofgoodssoldwere 20 000 thegrossprofitmarginwouldbeequalto 25 000minus 20 000 dividedby 25 000 or20 Basically 20 grossprofitmarginmeansthatforeverydollargeneratedinsales thecompanyhas20centsleftovertocoverbasicoperatingcostsandprofit NetProfitMarginNetprofitdividedbynetrevenues oftenexpressedasapercentage Thisnumberisanindicationofhoweffectiveacompanyisatcostcontrol Thehigherthenetprofitmarginis themoreeffectivethecompanyisatconvertingrevenueintoactualprofit Thenetprofitmarginisagoodwayofcomparingcompaniesinthesameindustry sincesuchcompaniesaregenerallysubjecttosimilarbusinessconditions However thenetprofitmarginsarealsoagoodwaytotocomparecompaniesindifferentindustriesinordertogaugewhichindustriesarerelativelymoreprofitable alsocallednetmargin RetainedProfit TopicsCovered ExecutivePaperCorporationFinancialRatiosTheDuPontSystemFinancialPlanningGrowthandExternalFinancing ExecutivePaper ExecutivePaper ExecutivePaper ExecutivePaper ExecutivePaper LeverageRatios LeverageRatios Totaldebt ratio totalliabilities totalassets LiquidityRatios LiquidityRatios EfficiencyRatios EfficiencyRatios ProfitabilityRatios ProfitabilityRatios MarketValueRatios MarketValueRatios TheDuPontSystem AbreakdownofROEandROAintocomponentratios TheDuPontSystem TheDuPontSystem assetturnover profitmargin TheDuPontSystem TheDuPontSystem leverageratio assetturnover profitmargin debtburden 5 13 2BewareofCreativeAccountingCreativeaccountingandearningsmanagementareeuphemismsreferringtoaccountingpracticesthatmayfollowtheletteroftherulesofstandardaccountingpractices butcertainlydeviatefromthespiritofthoserules Theyarecharacterizedbyexcessivecomplicationandtheuseofnovelwaysofcharacterizingincome assets orliabilitiesandtheintenttoinfluencereaderstowardstheinterpretationsdesiredbytheauthors Theterms innovative or aggressive arealsosometimesused Thetermasgenerallyunderstoodreferstosystematicmisrepresentationofthetrueincomeandassetsofcorporationsorotherorganizations Creativeaccounting isattherootofanumberofaccountingscandals andmanyproposalsforaccountingreform usuallycenteringonanupdatedanalysisofcapitalandfactorsofproductionthatwouldcorrectlyreflecthowvalueisadded 5 13 3ImportanceoftheAccounts Section14 5 14 1BusinessLendingProductsAdvantagesofbuyingourightDisadvantagesofbuyingourightBusinessoverdraftsTermloans FactoringandInvoiceDiscounting Debtfactoringinvolvessellingyourinvoicestoathirdparty Inreturntheywillprocesstheinvoicesandallowyoutodrawloansagainstthemoneyowedtoyourbusiness Essentially thesecompaniesprovideadebtcollectionandledgermanagementservice Itiscommonlyusedbybusinessestoimprovecashflowbutcanalsobeusedtoreduceadministrationoverheads Businessesthatsupplythisservicearecalledfactorsordebtfactoringcompanies Invoicediscountingisanalternativewayofdrawingmoneyagainstyourinvoices However yourbusinessretainscontrolovertheadministrationofyoursalesledger Aswellasprovidingfinance whichisprobablythemainattraction itoffersvaluablesupportservicesandcreditinsurance Thisguidegivesinformationonhowdebtfactoringandinvoicediscountingwork theadvantagesanddisadvantages differenttypesoffactoringandinvoicediscounting thecost andhowtochooseafactorordiscounter Section15 5 15 1AlternativestoBankLendingHirepurchase frequentlyabbreviatedtoHP isthelegaltermforacontractdevelopedintheUnitedKingdom andnowfoundinIndia Australia NewZealand IrelandandotherstateswhichhaveadoptedtheEnglishlawconcept InNorthAmerica wherethewordhiremostcommonlyreferstoemployment thecomparablesystemiscalledclosed endleasing Incaseswhereabuyercannotaffordtopaytheaskedpriceforanitemofpropertyasalumpsumbutcanaffordtopayapercentageasadeposit ahire purchasecontractallowsthebuyertohirethegoodsforamonthlyrent Whenasumequaltotheoriginalfullpriceplusinteresthasbeenpaidinequalinstallments thebuyermaythenexerciseanoptiontobuythegoodsatapredeterminedprice usuallyanominalsum orreturnthegoodstotheowner IntheUnitedStates ahirepurchaseistermedaninstallmentplan otheranalogouspracticesaredescribedasclosed endleasingorrenttoown Hirepurchasediffersfromamortgageandsimilarformsoflien securedcreditinthattheso calledbuyerwhohastheuseofthegoodsisnotthelegalownerduringthetermofthehire purchasecontract Ifthebuyerdefaultsinpayingtheinstallments theownermayrepossessthegoods avendorprotectionnotavailablewithunsecured consumer creditsystems HPisfrequentlyadvantageoustoconsumersbecauseitspreadsthecostofexpensiveitemsoveranextendedtimeperiod Businessconsumersmayfindthedifferentbalancesheetandtaxationtreatmentofhire purchasedgoodsbeneficialtotheirtaxableincome TheneedforHPisreducedwhenconsumershavecollateralorotherformsofcreditreadilyavailable LeaseFinanceLeaseOperatingLeaseContractLease 5 15 2Systemsofnon bankloansandgrants