5 c’s of credit analysis


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5 c's of credit analysis prepared by muhammad zubair under the kind supervision of SIR AHMAD GILLANI.

5 c’s of credit analysis

  1. 1. 5 C’s of Credit Analysis1 Character 2 Capacity 3 Capital 4 Collateral 5 Condition Income Assets & Social character statement liabilities Tangibility Economic survey analysis analysis Interview & Real estate Legal character Interview Liquidity observation analysis
  2. 2. CharacterSocial LegalQualitative = values, ethics and Qualitative = criminality behavior with record societyQuantitative = NADRA record, Quantitative = credit history domicile through E-CIB
  3. 3. Capacity (financial performance)Income statement analysis Interview & observationQuantitative Qualitative If there is no I/S thenExpenses < revenues (accept) interview is conducted andExpenses = revenues (reject) his or her financial performance is observed.Expenses > revenues ( reject) For this purpose analytical approach should be higher.
  4. 4. Capital ( financial performance)Assets & liabilities analysis AssessmentQuantitative Qualitative If there is no B/S thenAssets > liabilities ( accept) interview is conducted andAssets = liabilities (reject) his or her financial position is observed. For thisAssets < liabilities (reject) purpose analytical approach should be higher.
  5. 5. Collateral (security)Tangibility LiquidityQuantitative QualitativeHaving tangible mass. • Easily saleable • No time waitingTotal assets – intangible fixed • Less transactional cost assets
  6. 6. ConditionEconomic survey Real estate analysisQuantitative Qualitative A business, industry or Specially for consumer sector’s condition is loans real estate study is checked through the study necessary because the of economic surveys. securities are in the shape e.g. sizing industry, CNG of land. pumps