The credit department delivers reports at regular intervals (at least quarterly) to the administrator, the institution’s risk committee and the credit committee. Such reports typically contain important structural features of the credit business including a profile of the loan portfolio, collateral portfolio, the NPL percentage and so on.
The measures contained in this report must be clearly and logically documented. Taking due account of the scale, complexity and risk of the loans per approval level (local/branch), the risk report must comprise the following overall business and counterparty-related information:
- The development of the credit portfolio according to key structural features, particularly sectors, risk categories, size categories, and collateral categories (where appropriate);
- The extent of limits issued and committed; moreover, large exposures and other noteworthy exposures must be listed and commented on the credit committee and/or risk committee:
a-The maturity structure of the committee level credit portfolio,
b-Significant limit excesses (including a justification) since the last report,
c-The volume and development of new business and credit business in new products or on new markets since the last report;
- The development of risk provisioning, taking into account the committee level risk taking capacity;
- Important lending decisions taken since the last report which are at odds with the credit policy, and
- Credit decisions taken by the committee level in its local approval authority against recommendation of the higher-level authority.
All these items have to be included in each level credit committee minutes.
Suggested actions, e.g. to reduce risk, must also be included in the report. Where there are no relevant changes to information already disseminated in previous reports, the current report may refer to the earlier information. Major events (e.g. regarding developments in past due loans or significant limit excesses classified as risky) are to be reported to senior management and the respective approval authority immediately (ad hoc reporting) and are to be documented.
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