Oct 22, 2013 07:47
Commercial lending can be a large source of credit risk for any bank or credit union, especially for institutions in which commercial analysts are unfamiliar with the companies being analyzed or their industries. In that scenario, it’s like trying to read a book but not knowing the language. Or, at the very least, it’s like being unfamiliar with the dialect or the regional vocabulary.
A tool that commercial lenders can use to reduce credit risk and make better lending decisions is quality industry data, including up-to-date financial benchmarks for the relevant industry. With this added context, analysts are better prepared to interpret financial performance and know, for example, the average and above-average growth and profitability rates for the loan applicant’s NAICS or industry code. [More]