Examples of functional titles (for reference only) - Core Level

Role 1 – Credit Initiation and Appraisal
Credit officer, associate /assistant credit initiation manager, relationship officer

Key tasks

Support capturing of credit business from commercial / corporate clients
1. Assist in performing credit initiation of commercial lending within established policies
2. Assist in assessing borrowers’ credit and financial information for preparing credit proposals
3. Assist in evaluating the borrowers’ information relating to industry environment, revenue, financial condition, economic situation, legal situation, project evaluation, debt service capacity, etc.
4. Assist in assessing borrowers’ credit ratings
5. Assist in assessing other credit risk related information or documents such as the source of cash flows, repayment cash flow pattern, level of exposure, etc.
6. Assist in monitoring borrowers’ accounts
7. Assist in assessing whether the terms and conditions of the credit facilities can meet the financing need of borrowers
8. Assist in assessing whether the covenants, conditions and triggers are sufficient and effective for ongoing monitoring
9. Assist in assessing factors related to risk-adjusted returns / costing assessment

Qualification

• Passing Module 1 to Module 3 of the ECF on CRM training programme:

  • Module 1 – Credit Risk Management and Key Regulations
  • Module 2 – Fundamental Credit Risk Analysis
  • Module 3 – Fundamentals of Bank Lending certification

Having at least 1 year’s relevant experience in any of the functions as specified in Annex 1

Learning outcomes and topics

I. Core Level (Benchmarked at QF Level 5) - Learning Outcomes

After completing Modules 1 to 3, participants will be able to:

    • Apply financial and non-financial analysis to assess customer’s financial needs and creditworthiness
    • Analyse information about customer’s financial strength
      • (customer’s background,
      • occupation/industry,
      • income/revenue,
      • financial condition/economic situation/legal situation,
      • project evaluation,
      • debt service capacity,
      • credit history, etc.) and
      • review the credit rating of the customer
    • Calculate potential credit losses for determining eligibility and credit limits for lending
    • Evaluate the analysis results and make appropriate recommendation on the customer’s creditworthiness, repayment ability and risk level
    • Develop the terms and conditions of credit facility such as application of the appropriate contractual interest rates based on internal policies, payment period and payment options etc. according to customer’s needs and results of risk assessments
    • Determine the arrangement of credit facility such as access to funds, terms for the operating account etc. in order to minimise risks to the bank
    • Examine the credit application in conformity with relevant policies, compliance and regulatory requirements
    • Understand the fundamentals of monitoring credit assets portfolio and the recovery and work-out of problem loans

2. Learning Topics

Module 1 – Credit Risk Management and Key Regulations

• Monitoring of loan portfolio and early warning signals
• Understanding key credit risk quantitative indicators such as probability of default (PD),
loss given default (LGD), exposure at default (EAD), etc.
• Understanding portfolio performance indicators such as risk weighted assets (RWA),
risk adjusted returns, regulatory and/ or economic capital
• Understanding stress testing, scenario analyses, and other types of portfolio analyses
• Problem loan management and non-performing loans
• Overview of key credit risk regulations (Basel, HKMA – such as Supervisory Policy
Manual modules CR-G-1 to CR-G-14, New Personal Lending Portfolio Circular, etc.)
• Overview of Loan Provisioning Process (IFRS 9)
• Understanding and use of credit bureau reports

Module 2 – Fundamental Credit Risk Analysis

• Key accounting concepts and rules relevant to lenders
• Interpretation and critical analysis of financial statements from a lender’s perspective
(income statement, balance sheet and statement of cash flows)
• Financial ratios analysis
• Cash budget analysis
• Analysis of budgets and pro forma statements
• Understanding of limitation of financial statements and creative accounting
• Quantitative analysis (e.g. liquidity ratios, profitability ratios, cash flow analysis)

Module 3 – Fundamentals of Bank Lending

  • • Code of conduct (professional integrity, conflicts of interest and confidentiality)
  • • Interview and communication techniques essential to bank lending
  • • Understanding of different business sectors
  • • Verification of customer information and evaluation of credit history
    (including consumer credit data review)
  • • Collateral valuation, documentation and credit risk mitigation
  • • Property lending
  • • Unsecured personal lending
  • • Understanding borrower needs and analysis of repayment ability
    (e.g. ratio and networth analysis and credit scoring application):
    • nature of loan type,
    • assessment criteria
    • and considerations (e.g. credit scoring system in bank), and processes
  • • Lending to small and medium enterprises, large corporates, and listed companies
  • • Commercial lending products
    (e.g. equipment finance, trade finance, business property financing, business instalment loans, commercial overdrafts, invoice financing, taxi/public bus financing, vehicle loans, other commercial lending)
  • • Credit risk qualitative analysis (e.g. management, industry, SWOT analysis)
  • • Structuring of credit facility
    (type, amount, tenor, pricing, credit enhancement and financial and non-financial covenants)
  • • Types, risks and valuation of collaterals and other risk mitigation measures
  • SME Financing Guarantee Scheme and SME Loan Guarantee Scheme