...Declaration Chapter 1 Credit Risk Factors Copyright © 2016 CapitaLogic Limited. All rights reserved. No part of this presentation file may be reproduced, in any form or by any means, without written permission from CapitaLogic Limited. Authored by Dr. LAM Yat-fai (林日辉), 林日辉 林日 Principal, Structured Products Analytics, CapitaLogic Limited, Adjunct Professor of Finance, City University of Hong Kong, Doctor of Business Administration (Finance), CFA, CAIA, FRM, PRM. This presentation file is prepared in accordance with Chapter 1 of the text book “Managing Credit Risk Under The Basel III Framework, 3rd ed” Website : https://sites.google.com/site/crmbasel E-mail : crmbasel@gmail.com Copyright © 2016 CapitaLogic Limited Copyright © 2016 CapitaLogic Limited Outline 2 Banking activities Introduction Credit risk factors Credit risk measures A simple loan Appendices Deposits 3% - 20% Shareholders’ equity Copyright © 2016 CapitaLogic Limited Term loans, credit cards, mortgages, corporate bonds < 1% 3 Bank Dividend + equity price appreciation Copyright © 2016 CapitaLogic Limited 4 Funding source Credit Credit Loan Private lending placement Bond The idea that a borrower uses other people’s monies in pursuit of his financial needs Spend today but pay tomorrow DEBT A loan transferable among lenders Interest Equity To compensate a lender for supplying temporary funding to a borrower Media focus in developed countries and China Time value of money Default of the borrower...
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