Being a professional banker, you should have the ability to extract critical information from financial statements and other data that can make a good risk analysis that leads to an effective credit application and therefore a smoother lending decision process.
Up until now, we have covered a structured approach for risk analysis under workshops FA1 Phases 1, 2 and 3. We now wish to assess your ability to apply your learning from those phases.
For workshop FA1 Phase 4, we will be using a case based on a publicly listed company (AIR ARABIA) to help us emphasize the desired learning outcome of this program.
Please use the attached :
1. Fact Sheet (Sept 2014),
2. Air Arabia IR Presentation FY2014
3. Visit https://www.airarabia.com/ to download financial statements (FYE 2013),
and other information that you will need for your assignment.
Your report should cover the following issues (assuming that you are in September 2014- date of the attached fact sheet)
Step 1-Scope of Analysis:
1. Who do we have a risk on? Legal Counterparties/ Credit base. (draw an organogram).
2. What specifically were we asking the credit committee to approve in the attached fact sheet (nature of the transaction, credit need, source of repayment)?
Step 2-Credit Risk Grid
3. Describe the business (activity/products, clients, geography, competitors, suppliers, technology)
4. What are the major Business Risks and Mitigants?
5. What is your view on the reliability of data (auditor, accounting policies, off balance sheet items etc)?
6. Prioritize the relevant historic income statement and balance sheet ratio trends to be analyzed in the CA
7. Prioritize the non-financial factors causing these historic trends
8. Analyze Cash Flow statements using PACED and TANK as discussed in the previous phases.
9. Are there any structure risks arising from the group structure or the nature of the transactions provided by NBAD?
10. What, in your view, are the five or six critical issues which the credit decision maker needs to be comfortable with in order to continue or expand the relationship with Air Arabia?
11. What comments (both positive and negative) would you make about the quality of the Fact Sheet Sept 2014?