The loan portfolio allows the bank to make a profit from the funds issued at interest. There are many classifications. The best loan portfolio is considered to be the best, which creates favorable conditions for borrowers. This shows the maturity and reliability of the bank.
Bank loan portfolio - the amount of debts that clients have to the institution in a specific period of time. It is a digit that is calculated with reference to a date. It is taken into account that lending operations are performed daily.
Types of loan portfolios
The loan portfolio is gross and net. The first includes loans issued but unpaid. Net is calculated minus the amount of provisions that are prepared in the event of losses. Every solid financial institution should have a reserve fund. Its size is indicative of the opportunity and the risks.
Portfolios also differ in relation to the bank's policy:
- Optimal. It matches the bank's marketing and lending strategy in the best way.
- Balanced. It is aimed at solving the most controversial problem "risk - profitability". It is similar in structure and optimal, but may differ from the first in separate stages.
- Risk-neutral. This option has low risk and profitability indicators.
They are also subdivided on other grounds. According to the subjects of crediting, they are divided into types for individuals and legal entities. The terms can be short-term, medium-term, long-term. The larger a short-term loan is, the more it is considered liquid.
Formation features
Creating a loan portfolio is the main task of any financial institution, as it allows you to make a profit. Today it is customary to distinguish several stages of formation. Each takes into account the general and specific principles of the formation of the loan portfolio.
Every bank that decides to provide funds to citizens must:
- analyze the factors that influenced the amount of demand;
- build up credit potential;
- ensure the right balance of potential and loans;
- develop a plan that will help improve your existing portfolio.
When forming the structure, various factors affecting the development of the entire bank are taken into account. These include the characteristics of the market sector, for example, the work of commercial institutions affects certain economic sectors.
The amount of bank capital is also an important parameter. The maximum allowable limit issued to each borrower depends on it. Due to this, it acts as a limiting factor.
When all the stages have been passed, it remains to carry out effective management of the company. It is based on making a profit by minimizing risks. The entire organizational structure is based on a clear delineation of the competencies of employees. Managers at different levels have their own powers, they can change the basic conditions for granting loans, taking into account the previously created formulas.
What is and is not included in the portfolio?
The structure includes the ability to choose a foreign currency or ruble loan account, the availability and method of providing property as collateral, and the specifics of debt repayment. Depending on the bank's policy, this list may be supplemented by other items.
The peculiarity is that the loan portfolio does not include loans issued to government agencies, various off-budget funds. This is due to the creation of special conditions for them, which imply the absence of collateral or a significant reduction in interest rates. Therefore, the loan portfolio shows only typical activities of a financial institution.
Thus, the formation of a loan portfolio is the first step towards obtaining the desired result. This indicator is displayed on the bank's rating. Therefore, it is important to use the data obtained during the analysis and apply them in solving practical problems. One of the most effective tools for raising a bank's level is the development and implementation of an optimal portfolio. A properly formed balance of assets and liabilities allows the management to correctly choose the current course, taking into account the risks and potential.
