Bank Analysis School September 2023 - Presentations & Resources

APPENDIX A - DEFINITION AND TYPES OF INTEREST RATE RISK A PENDIX D: Determining a Rating

Earnings & Capital

Position Asset/liability mismatch

Risk Management Practices

Sensitivity Rating

•Minimal potential that earnings performance or capital will be adversely impacted. •Earnings and capital provide substantial support for the amount of risk taken. •Risk management practices are strong for the size and complexity of the bank. •Moderate potential that earnings performance or capital will be adversely impacted. •Earnings and capital provide adequate support for the amount of risk taken. •Risk management practices are satisfactory for the size and complexity of the bank. •Significant potential that earnings performance or capital will be adversely impacted. •Levels of earnings and capital may not adequately support the amount of risk. •Risk management practices need improvement given the size, sophistication, and level of risk taken by the bank. •High potential that earnings performance or capital will be adversely impacted. •Earnings and capital provide inadequate support for the amount of risk taken. •Risk management practices are deficient given the size, sophistication, and level of risk taken by the bank. •Level of risk presents an imminent threat to the viability of the bank. •Risk management practices are wholly inadequate for the size, sophistication, and level of risk taken by the bank.

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