Methodology for planning of bank’s credit activity indicators

Oleksandr Syrchyn
PhD in Economics, Associate Professor, Department of Banking,Odessa National Economic University, е-mail:aleks_syrchin@ukr.net

Cite this article:

Syrchyn, О. (2017). Methodology for planning of bank’s credit activity indicators. Ed.: M. Zveryakov (ed.-in-ch.) and others [Metodyka planuvannia pokaznykiv kredytnoi diialnosti banku; za red.: M. I. Zveriakova (gol. red.) ta in.], Socio-economic research bulletin; Vìsnik socìal’no-ekonomìčnih doslìdžen’ (ISSN 2313-4569), Odessa National Economic University, Odessa, No. 2-3 (63-64), рр. 127–134.

Abstract

The article proposes a scientific and practical methodology for planning of credit activity indicators of Ukrainian bank. As a result of the conducted research, it is substantiated: 1) the planning of the bank’s credit activity should determine future value of main indicators: size of loan portfolio (loans provided), costs of forming reserves for loans issued, interest income and the average interest rate on loans; 2) some calculated indicators are determined by other sections of the bank’s plan and enter the planning section of the bank’s credit activity as fixed values; 3) part of the values of the calculated indicators depends on the credit policy of the bank and can be determined by statistical methods or established as a subjective normative value (by decision of the bank’s governing bodies in accordance with the subjective assessment of the bank’s situation in the future); 4) the proposed methodology was tested using the example of Ukrainian bank.

Keywords

commercial bank; bank assets; credit policy of the bank; planning of the bank’s credit activity; loan portfolio of the bank; average interest rate on loans; net interest margin; interest income; reserves of the bank for credit operations.

JEL classification: G210;  DOI: https://doi.org/10.33987/vsed.2-3(63-64).2017.127-134

UD classification: 336.7

References

1. Valraven, K. (1997). Risk management in commercial bank. Trans. from Eng. [Upravlenie riskami v kommercheskom banke; per. s angl.], IEDPB, Washington, 303 s. [in Russian]
2. Gryuning, Kh. (2007). Analysis of bank risks. Trans. from Eng. [Analiz bankovskikh riskov; per. s angl.], Ves mir, Moskva, 304 s. [in Russian]
3. The activity of banks in ensuring the sustainable development of the financial market of Ukraine: monograph, ed. V. Kovalenko (2014) [Diialnist bankiv u zabezpechennia staloho rozvytku finansovoho rynku Ukrainy: monohrafiia; za red. V. Kovalenko], Odesa, Atlant, 358 s. [in Ukrainian]
4. Credit activities of Ukrainian banks: problems and prospects of development: monograph, ed. V. Kovalenko (2015) [Kredutna diialnist bankiv Ukrainy: problemy ta perspektyvy rozvytku: monohrafiia; za red. V. Kovalenko], Odesa, Atlant, 217 s. [in Ukrainian]
5. Kozmenko, S. M. (2003). Strategic management of the bank [Stratehichnyi menedzhment banku], Sumy, Universutetska knyha, 734 s. [in Ukrainian]
6. Morsman, E. (2004). Credit portfolio management. Trans. from Eng. [Upravlenie kreditnym portfelem; per. s angl.], Alpina Biznes Buks, Moskva, 208 s. [in Russian]
7. Rose, P. (1995). Bank management. Trans. from Eng. [Bankovskiy menedzhment; per. s angl.], Delo LTD, Moskva, 768 s. [in Russian]
8. Sinki, Dzh. (2007). Financial management in commercial bank and in financial services industry. Trans. from Eng. [Finansovyy menedzhment v kommercheskom banke i v industrii finansovykh uslug; per. s angl.], Alpina Biznes Buks, Moskva, 1018 s. [in Russian]
9. Official site of the National Bank of Ukraine [Ofitsiinyi sait Natsіonalnoho Banku Ukrainy], available at: http://www.bank.gov.ua [in Ukrainian]