Thuyết trình CAMELS and PEARLS application to financial management of commercial banks

CAMELS and PEARLS: application to financial management of commercial banks Banking Management Class: Banking , Intake: 56 Group: 10 Group members: 1 VU NHAT ANH 2 DUONG QUOC HUNG 3 VU HA LINH 4 LA THU PHUONG 5 GIANG VIET TUNG OUTLINE  I OVERVIEW: CAMELS & PEARLS  II application to financial management of commercial banks: vietcombank I Overview: camels & pearls   Similarity CAMELS PEARLS The system of assessing the strength of a financial institution The assessment is based on factors, including common factors: Asset Quality, Liquidity I Overview: camels & pearls CAMELS Speciality CAMELS stands for : - Capital Adequacy: Capital adequacy, - Asset Quality: Asset quality, - Management competence: Management level, - Earnings strength: Profits, Liquidity risk: - Sensitivity to market risk: Sensitivity to market risk PEARLS PEARLS stands for: _Protection _Effective Financial Structure _Asset Quality _Rates of Returns and Costs _Liquidity _Signs of Growth I Overview: camels & pearls CAMELS Speciality PEARLS _These are the six elements of an assessment system _A system designed to monitor the financial performance of particular institutions, that examines and monitors the level of safety and particularly small-scale financial institutions robustness of commercial banks, are set in the US _It is considered a necessary tool for regulators to monitor, alert and rate member Federal Deposit Insurance Corporation Act 1991 (FDICIA) financial institutions _In fact, the later CAMELS rating system is also _PEARLS uses a set of financial criteria and evaluation criteria closely related to extensively applied to financial institutions in each other, evaluates this indicator, considers the impact of other indicators and vice general versa Most US banks must submit this verification report _PEARLS: is mainly based on data from the balance sheet of accounts -> PEARLS is annually to the state or federal regulator Small banks or very convenient for exploiting the input data and is suitable for information exploitation, strong capital base are required to submit a 1.5-year reports from financial institutions of Vietnam report _This model has been studied by the International Credit Union (WOCCU) as a surveillance model since the late 1980s I Overview: camels & pearls CAMELS DIFFERENCES PEARLS _CAMELS also use qualitative criteria (M-manager) _PEARLS completely uses quantitative criteria _CAMELS uses data as a statistical report from financial _PEARLS is primarily based on data from the balance institutions members of accounts _CAMELS is being used as the official monitoring method of _PEARLS also measures growth (S) state management agencies II Application to financial management of commercial banks: vietcombank Overview: vietcombank: Trading name Vietcombank Native name Ngân hàng Ngoại thương Việt Nam Type Joint stock bank Industry Banking and Finance Founded 1 April 1963 II Application to financial management of commercial banks: vietcombank C-Capital adequacy:  Capital adequacy is measured by the raito of capital risk weighted assets 1.1 Equity II Application to financial management of commercial banks: vietcombank C-Capital adequacy: 1.2 Charter capital:  1.State bank of Vietnam:  + Number of share: 2,724,353,387  + Holding: 77.11%  2.Mizuho bank :  + Number of share: 539,668,502  + Holding: 15%  Other shareholder:  + Number of share: 283,746,686  + Holding : 7,9%  Charter capital of VCB : 35,977,685750,000 dong  Legal capital in Vietnam : 3,000 bill dong II Application to financial management of commercial banks: vietcombank C-Capital adequacy: 1.3 Capital adequacy analysis criteria: 1.3.1.Capital Adequacy Ratio (CAR) : CAR in VietNam follow by Decision 13/2010 by State bank of Vietnam CAR > 9%   2011 2012 2013 2014 2015 => VCB had met the requirement of Vietnamese state bank about CAR from 2010 In the following years, the index was CAR(%) 11,14 14,83 13,37 11,61 11,04 extremely high II Application to financial management of commercial banks: vietcombank C-Capital adequacy: 1.3 Capital adequacy analysis criteria: 1.3.2 Loans/Deposits ratio:  December 31, 2015: Customer deposits increased 18.7 %, and customer loans increased 19.9% in comparison with 31/12/2014  Loans outstanding at 31/12/2015 reached 387.7 bill dong, up 10.2% compared with 31.12.2014; Loans/Deposits ratio increased 0.8% compared with the end of 2014 II Application to financial management of commercial banks: vietcombank A-Asset Quality  2.1: The quality of loans: Compared with banks that have the same size as BIDV, Vietinbank Chart Title Loan structure: Vietcombank BIDV Vietinbank II Application to financial management of commercial banks: vietcombank A-Asset Quality  2.1: The quality of loans: Compared with banks that have the same size as BIDV, Vietinbank Bad debt/Credit balance 0.02 0.02 0.01 II Application to financial management of commercial banks: vietcombank A-Asset Quality  2.1: The quality of loans: Compared with banks that have the same size as BIDV, Vietinbank PLL/Credit balance 0.02 0.01 0.01 II Application to financial management of commercial banks: vietcombank Structure of profitable assets A-Asset Quality  2.2 The quality of Portfolio:  Portfolio (profitable assets) includes: Deposits, loans or investments (excluding non-recoverable debts)  17% 3% 21% Profitable assets/Total Assets ( of VCB in 2015) = 95,11% 59% Cash due from Central Bank Cash due from other depository institutions Loans Securities and funds II Application to financial management of commercial banks: vietcombank M-Management quality Characteristics of successful bank management  - Ability  - Leader  - Compliance with regulations  - Ability to plan  - Ability to cope with changes in the surrounding environment  - The quality of policies and the ability to control policy compliance II Application to financial management of commercial banks: vietcombank E –Earning  Respecting the business environment is an integral part of the results of business operations In addition, the wind generates wind turbines, which provides an economical and economical solution for the wind farm Earnings will be used to send invitations, prizes, invitations and other invitations Hence, it is important to gauge the effectiveness of the operation of commercial banks  CBs have revenue sources:  + Income from capital  + Income from commission  + Income from business activities  + Other income II Application to financial management of commercial banks: vietcombank E – Earning: The most important feature of a product is its size, its size and its weight II Application to financial management of commercial banks: vietcombank E – Earning: In 2016, Vietcombank's ROA and ROE ratios were high at 0.9% and 14.2% II Application to financial management of commercial banks: vietcombank L – Liquidity risk exposure  Liquidity risk exposure : is generally defined as the ability of a financial firm to meet its debt obligations without incurring unacceptably large losses Liquidity risk management :  Keep percent of cash  Short term capital used long term credit minimum  Maintain Reseve ratio for each deposit II Application to financial management of commercial banks: vietcombank Criteria  CASH: cash and due from deposit institutions/ total assets  Liquidity securities: government securities/ Total assets  Making loans: gross loans and leases/ Total assets  Shorterm investment/ sensitive capital  Deposit structure: payment/ deposit Chỉ tiêu 2014 2015 2016 Chỉ số trạng thái tiền mặt 0.29 0.24 0.23 Chỉ số chứng khoán khoản 0.0035 0.0046 0.0096 Chỉ số lực cho vay 0.56 0.56 0.57 Tỷ số đầu tư ngắn hạn/vốn nhạy cảm 0.51 0.52 0.77 Chỉ số cấu trúc tiền gửi 0.45 0.39 0.40 Tỷ lệ tín dụng/ tiền gửi 0.67 0.66 0.68 II Application to financial management of commercial banks: vietcombank S – SENSITIVITY TO MARKET RISK INTEREST RISK THE CHANGE OF INTEREST IN MARKET EXCHANGE RATE RISK SELL AND BUY FOREIGN CURRENCIES INTERNATIONAL PAYMENT OPERATION Thank you for listening! ... OVERVIEW: CAMELS & PEARLS  II application to financial management of commercial banks: vietcombank I Overview: camels & pearls   Similarity CAMELS PEARLS The system of assessing the strength of a financial. .. II Application to financial management of commercial banks: vietcombank E – Earning: The most important feature of a product is its size, its size and its weight II Application to financial management. .. _CAMELS is being used as the official monitoring method of _PEARLS also measures growth (S) state management agencies II Application to financial management of commercial banks: vietcombank Overview: