Bank credit portfolio management

Inappropriate credit risk management is one of the main reasons of bank collapse. The major part of bank capital in traditional banking consists of credits. Thus credit risk management strongly influences stability of banks. The purpose of this work is to analyze the specifics of bank activity risks, paying great attention to credit risk analysis, and to explore and evaluate the possibilities of bank credit risk management and assessment. The tasks of this job are the following: - (to) analyze characteristics of bank activity and credit risks. - (to) describe the sources and reasons of credit risk and present credit principles. - (to) evaluate the variation of credit portfolio and the factors influencing it - (to) analyze credit risk and credit risk limiting standards. - (to) inspect the tools reducing credit risk The increase of Lithuanian bank credit portfolio in years 2003 - 2005 is mostly related to real estate market. This is because the major part of credits is devoted to buy accommodation. As the main risk of this increase we can mention indetermination in real estate market. As more and more people tend to take credits in euros, there exists a decrease in credits, taken in litas. So if there would be problems to make euro as our currency it could appear potential currency risk. Banks find more perspectives in long term credits and it makes good circumstances for bank clients to develop their investment projects. On the other hand, long term credits determine bigger credit risk because it is more complicated to forecast debtors’ financial stability. Despite strongly growing credit portfolio, banks satisfy all safety requirements. The graduation paper contains 47 pages, 27 pictures and 2 tables