A one-day workshop offering an insight into the credit analysis of captive and independent finance companies and specialist leasing companies. The workshop uses a structured approach and cases are tailored to the market where it is run.
N.B. - includes Mortgage Companies analysis in the US.
Course Objectives
Participants will be equipped to:
- Distinguish the key business and financial risks for the different types of finance and leasing company: captive, consumer, sales finance, credit card, mortgage and operating and finance lease companies
- Identify strong and weak performers using benchmarks for the key asset quality, earnings, liquidity and capital adequacy indicators
- Use market indicators, quantitative and qualitative analysis to and detect early signals of changing credit quality
- Evaluate financial statements to uncover key credit issues and the impact of differing accounting policies.
Target Audience
An intermediate credit course for experienced commercial, investment banking and fixed income professionals responsible for credit risk management, origination, or fixed income investment, sales/trading. Participants with less experience in the analysis of financial statements may wish to attend the two day Introduction to Bank Financial Statements, which leads into this workshop.
The majority of Fitch Training programmes are offered at an intermediate and advanced level. There are no specific prerequisite courses to attend our programmes, however some topic knowledge maybe required. Please refer to the target audience to see what level of prior knowledge is required for a specific course.
Content
ANALYTIC OVERVIEW
- Perspective on finance and leasing companies - rating agencies, debt and equity investors
- Purpose payback model - dependence of finance companies on debt capital markets for refinance
- Risks to repayment - sector and company-specific analysis
- Structure - protecting lender's interests: warehouse and borrowing base facilities and other structural issues
OPERATING ENVIRONMENT
- Key risks and competitive issues by sub-sector - sales finance, direct finance, equipment finance, credit cards and mortgages etc.
- Impact of minimal regulation and supervision; legal framework of secured lending
MANAGEMENT, FRANCHISE AND OWNERSHIP
- Franchise - assessing the validity of the business model, residual marketing and reliance on parent company, where relevant
- Critical management issues - strategy, risk appetite, processes and systems, market knowledge etc.
- Shareholders - quality of financial and business support; risks and benefits of cross subsidies
FINANCIAL FUNDAMENTALS
- Statement logic; accounting policies for income, receivables, delinquencies and leases (finance versus capital leases etc.)
- Business risk - use of financial tools to assess quality of lease and loan book; reserve adequacy, owned versus managed book; residual risk
- Funding risk - stability and variety of wholesale funding sources, gap management, availability of contingency funding, liquidity and capital adequacy
- Securitization - benefits and risk of off balance sheet funding vehicles; residual risk, mortgage servicing rights and gain on sale accounting
- Performance risk - balancing risk and return; income stability and expense control
- Early warning signals - lessons learned from failed finance companies.
Workshop Times
Below are typical timings for our courses; upon registration we shall advise you if these have changed.
Breakfast: 8.30am
Course Start: 9.00am
Course End: Between 5.00pm and 5.30pm
Lunch starts between 12.30pm and 1.00pm, and lasts no longer than 1 hour.
Short breaks of 10 - 15 minutes are taken mid morning and mid afternoon.