| | One of the most important tasks for a financial institution is to manage its loan portfolio adequately. The loan portfolio is usually the largest asset of a financial institution and, therefore, its main revenue generating asset, so ensuring accurate and timely reporting of the portfolio quality is crucial for competent management. In simple terms this means finding out if the institution is recovering the money it lends. There is a great diversity of ratios used to measure loan recovery and delinquency and it is important to understand how to choose and use them. In particular a monitoring system is needed that highlights repayment problems clearly and quickly, so that loan officers and their supervisors can do something before it gets out of hand. | |
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