Uman NUH | today: 05/16/2019

The formation and the impact of the credit portfolio on the credit risk of commercial bank (on the example of "Privatbank" PJSP CB)

Author(s) Melnyk К. М., , ,
Kolotukha S.M., Candidate of Economics, , Uman National University of Horticulture, Ukraine
Category Economics
year 2017 issue Випуск №90. Частина 2
pages 105-115 index UDK 336.71
Abstract Credit risk is the largest share of the risk of the bank operations and therefore it mostly determines the performance of bank activities such as the amount of assets by level of risk, provisions for credit operations, capital adequacy and profitability of the capital of bank. The aim of the article is to study the influence of factors of the portfolio on the credit risk of commercial bank and to study the ways of their solution. In the process of the research we used the following research methods as abstract, logical, empirical, time series, as well as a systematic approach to problem solution. The results of the data analysis of the article allows us to make the conclusion that the volume of problem of loans in the loan portfolio of banks is the main indicator of its quality. Analysis of the structure of impaired loans to legal entities of Privatbank during the period 2011- 2015 showed that their share in the loan portfolio increased by 34.6 percentage. The reason for this situation in the first place was the growth of rate of foreign currency to the national currency of Ukraine, establishment of too high interest rates and a large mortgage, which is several times higher than the amount of the granted loan, as well as write-offs of loans in the Crimea and Donbas. In order to minimize the credit risk and improve the quality of the bank's portfolio we must: accumulate reserve and raise additional capital; receive from borrowers additional collateral for loans, which in its turn will reduce the value of uncovered credit risk and the need for additional capital; to secure debtors the return of bad debts, which will reduce the need for bank reserves.
Key words credit portfolio, credit risk, interest rate, credit policy, loan impairment.
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