Credit Ratings of Banks - Beginners Course

Through these tutorials we shall brush upon the very basics of credit ratings of bank and the various factors considered in the same. The training has been taken with the help of practical illustrations and examples to understand the topics better.

The training will include the following;
1. What are credit ratings

2. Factors to consider for credit rating of banks

• Asset Quality

• Profitability

• Capitalization

• Funding and Liquidity

• Economy

• Size and Market Share

3. What can lead to sudden rating change

Creditors use a credit score rating scale to assess an individual’s creditworthiness, i.e., a person’s likelihood of whether the company can pay the debt obligation fully on time. Different credit rating agencies provide credit ratings. A rating is given to any issuer, i.e., an individual, corporate, state, or sovereign government seeking to borrow the money. The rating does not say whether an investor should really buy that bond, but it is just one of the most important parameters an investor should consider before investing in any bond. A rating suggests both the present situation and the impact of future events on credit risk. Credit ratings are not constant. They keep changing from time to time as the credit quality of an issue or issuer alters in ways that were not expected when a rating was assigned. For example, consider a new technology that was not expected, which was not considered while assigning a rating to a company. This new technology might lead to a negative impact on the financials of the company. This may impact the downgrading of the current rating.