2. Methods of analysis of the financial condition.
Express-analysis, the purpose of this type of analysis is a clear and simple assessment of the financial condition of a commercial bank and the dynamics of its development. Express-analysis is conducted in three stages:
Preparatory stage. This stage is used to prepare financial information for calculation. This work is largely technical. Here the visual and the elementary counting check on formal signs and in essence is spent: presence of all necessary forms and appendices is defined; currency of balance, mutual coordination of indicators of accounting forms and control parities is checked; the system of the factors most completely reflecting the purposes of the spent analysis, preparation of accounting forms is spent. After the balance (and other forms) has been prepared for analysis, the method of express analysis shall be selected, which most fully corresponds to the purpose of its implementation (in this situation - determination of the bank's reliability).
In order to assess the financial condition (reliability) of a commercial bank, two ways are usually used in express analysis: either structural-coefficient analysis (the main conclusions about the bank's reliability are made on the basis of the study of the balanced structure, and a number of coefficients are used to correct the obtained results), the purpose of the balance at this method of analysis is so great that the structural-coefficient analysis is sometimes called the method of balance analysis; or all characteristics are calculated on the basis of the system of coefficients. But in any case, before the analysis, the balance structuring is carried out - in assets and liabilities of the balance the groupings of accounts with homogeneous economic content are formed. At the same time, the quality of the obtained results will depend on the correctness of compiling the groupings of accounts participating in the analysis and compliance of the control values of the indicators with the conditions in which the bank operates. The system of coefficients for the analysis of different reporting forms may differ somewhat, it is connected, first of all, with the fact that it is impossible to make up correctly equivalent notions (groupings of accounts) participating in calculation on different reporting forms.
Therefore, for different forms, the system of coefficients describing the main characteristics of reliability changes to assess the characteristics considered most fully.
Estimated stage. At this stage, groupings and coefficients are calculated from available financial statements.
Analytical stage. This stage is the most responsible one, as it is used for analysis of the received results of calculation and assessment of the bank's financial condition.
Accordingly, the results of the analysis can be characterized by the bank as: able to work without failures in any crisis situation, able to withstand certain types of risks (crisis manifestations of the market), the ability to work only in a stable financial market, with any failure in the work may cause a crisis and bankruptcy of the bank.
As the essence of the express analysis consists of the selection of the minimum allowable number of the most essential and relatively simple in calculating indicators, as a result of its implementation it is possible to define the financial position of the bank as absolutely reliable or - the most problematic. To assess the bank's ability to withstand certain types of risks, it is necessary to conduct a more detailed analysis of the financial condition. However, it should be noted that for professionals, even such an approximate analysis allows to get a clearer picture of the bank's financial condition. To determine the highest reliability or problems of the bank, the coefficients used in the analysis, have two control values: acceptable and critical.
Moreover, the permissible value of the indicator is the one that characterizes the bank as able to cope with any difficulties in its work, relying only on the available resources, i.e. without attracting resources from the financial market.
The critical value of the indicator characterizes the bank's work as unstable even at favorable market conditions.
If the obtained result is within the acceptable value, the reliability characteristic described by this coefficient corresponds to the state of "absolute reliability of the bank".
If the obtained result is between acceptable and critical values, it means that the bank is not able to resist certain types of risks and in some situations it may have serious problems, causing malfunctions.
If the result of the calculation is lower than the critical value, the bank pursues a very risky policy and may find itself in a very difficult financial situation in any market situation.
To obtain an overall assessment of the bank's reliability, a comparative analysis of the calculation of individual coefficients is carried out and a preliminary conclusion about the bank's reliability is made on its basis (absolute, relative, doubtful).
To be continued the next part.