通过银行贷款损失准备论如何从管理创新角度使收入平稳【外文翻译】

银行的贷款损失准备金制度（原创实用版3篇）目录（篇1）一、引言二、贷款损失准备金制度的定义和目的三、贷款损失准备金制度的监管标准四、贷款损失准备金制度的管理要求五、结论正文（篇1）一、引言在现代银行业中，风险管理是至关重要的。

其中一个重要的风险管理工具是贷款损失准备金制度。

这个制度旨在帮助银行评估和管理贷款风险，以便在贷款违约时能够有足够的资金来弥补损失。

本文将详细介绍贷款损失准备金制度的定义、监管标准和管理要求。

二、贷款损失准备金制度的定义和目的贷款损失准备金制度是指银行在发放贷款时，根据一定比例从贷款中提取的准备金。

这个准备金的目的是为了在贷款违约时，银行能够有足够的资金来弥补损失。

贷款损失准备金制度的主要目的是增强银行的风险防范能力，促进银行的稳健运行。

三、贷款损失准备金制度的监管标准贷款损失准备金制度的监管标准主要由两个指标构成：贷款拨备率和拨备覆盖率。

贷款拨备率为贷款损失准备与各项贷款余额之比，拨备覆盖率为贷款损失准备与不良贷款余额之比。

根据监管要求，银行的贷款拨备率基本标准为 2.5%，拨备覆盖率基本标准为 150%。

银行业监管机构会根据经济周期、宏观经济政策、产业政策等因素对这两个标准进行动态调整。

四、贷款损失准备金制度的管理要求银行在管理贷款损失准备金制度时，需要遵循以下要求：1.董事会对管理层制定的贷款损失准备管理制度及其重大变更进行审批，并对贷款损失准备管理负最终责任。

2.管理层负责建立完备的识别、计量、监测和报告贷款风险的管理制度，审慎评估贷款风险，确保贷款损失准备能够充分覆盖贷款风险。

3.贷款损失准备管理制度应当包括贷款损失准备计提政策、程序、方法和模型、职责分工、业务流程和监督机制、贷款损失、呆账核销及准备计提等信息统计制度、信息披露要求等。

4.银行应当建立完善的贷款风险管理系统，在风险识别、计量和数据信息等方面为贷款损失准备管理提供有效支持。

五、结论贷款损失准备金制度是银行风险管理的重要工具，有助于银行评估和管理贷款风险。

不良贷款管理中英文对照外文翻译文献(文档含英文原文和中文翻译)Non-performing Loans Management and RecoveryWilliam J. Bauman and Alan S. BlinderAbstractWith the deepening of China's economic system reform development and continuous improvement of the system of the market economy, banks ' lending business becomes completely open to individuals, personal loans of business growing, continues to expand the scope of business, especially the development of individual housing loan more quickly. Personal housing loan business in China at the time of its development, there are bad credit risks as well as the competitive situation is not optimistic, to a certain extent, hamper the development of individual housing loans, to sustainable development, research management must be strengthened on a number of issues. This article from the current development status of individual housing loan business to start, pointed out that because of the existing problems as well as problems and focus on how to develop personal housing loan bad credit risk reduction, foreign experiences and lessons learned, and thoughts and countermeasures for management, to promote the healthy and rapid development of the business.Key words:Housing loans to individuals; Bad credit risks; present situation; problem; Countermeasure1. IntroductionUnder the five-category loan classification, substandard, doubtful and loss loans are defined as non-performing loans. Because the reasons behind non-performing loans formation are different, credit associates must take effective measures to manage, recover and dispose of these parts of asset according to their different characteristics. The bank should first find out the responsibilities of the guarantor and dispose of the security in time. Only when they confirm that the guarantor has lost the guarantee abilities and the security is not sufficient to pay off the loan, can they begin to dispose of the non-performing loans.2. ReasonsThere are many reasons why banks have poorly performing loan portfolios. Irrespective of these causes, banks have an obligation to shareholders, depositors and creditors to maximize cash flow from assets, the most troublesome aspect of which has been the poor record of banks in recovering loans. It is this factor that has contributed the most to bank insolvency, and liquidity constraints.There are several complementary options available to banks to restructure problem loans and portfolios, including:•Exercise of collateral (liens against property, inventories) through judicial or extra-judicial means.•Out-of-court settlement that may focus exclusively on debt negotiation, restructuring and repayment, or lead to the financial, physical and operational restructuring of the enterprise.•Bankruptcy/liquidation procedures through formal court proceedings. This may involve liquidation, reorganization or privatization of an enterprise to enforce partial or total loan repayment.(Besides the bank itself, sometimes government also leads a restructuring program to help the bank to solve the problem of NPL in order to stabilize the banking industry or the whole economy, for example, Asset Management Company (AMC), a special purpose company, buys or exchanges NPL from bank and disposes of them).3. Work-Out UnitWith aggregate loan portfolios universally troubled by delinquencies and defaults, some banks have opted to develop work-out units to improve loan portfolio quality. When work-out units are established, they are usually set up to deal with most of a bank's problem loans, effectively sectioning off non-performing loans from the broader bank portfolio of performing loans. The benefits expected from work-out units include;•Concentrated focus on the recovery of problem loans;•More developed banking expertise and credit risk evaluation skills;•Improved internal bank system (early warning systems, collateral requirements, credit information needs).Work-out units can make a significant difference in restructuring loan portfolios, particularly when supported by effective technical assistance.4.Loan Restructuring and Loan "Rollover"Case-by-case loan restructuring is common in market-oriented economies, particularlywhen borrowers are unable to meet the original terms of the loan agreement due to external factors. These restructuring invariably changes in the amount, terms and /or schedule of interest rates, principal repayment, and collateral values. Loan covenants ( ratios, report requirements) often change to facilitate compliance. In some cases, radical measures such as replacing management are involved.This approach is similar to what work-out units attempt to do: recover portions of loan portfolios which have deteriorated and are non-performing. However, workout units are often organized on the basis of sector, location or bank exposure. Case-by-case loan restructuring is conducted on an individualized basis. The benefits of individual case-by-case loan restructurings include:•Reinforcement of the bank-client relationship.•Retention of the loan by the bank on its balance sheet, even if provisions are made for possible losses.•Preservation of the firm's relations with other parties (trade creditors, other banks, buyers, employees), thereby maintaining its reputation without embarrassing and costly bankruptcy / liquidation procedures.As with debt-equity swaps, the risk to the bank is that it is overly optimistic about prospects, and that additional resources are committed to the borrower adding to bank losses and reduced loan able funds at a future date. This has occurred frequently in transition economies (such as China, East European countries, former Soviet Union).In transition economy banks, the closest approximation to the Western loan restructuring has been the loan "rollover" which has been a common practice. Rollovers generally involve the following two techniques:•Simple rollover of principal on/before the due date, with the enterprise meeting interest obligations.•Rollover of principal on/before due date, with interest added back to the principal amount (“interest capitalization").The first technique is legitimate and rational unless the enterprise is unable to repay principal, and likely to remain impaired in the future. The second technique often reflects a troubled loan and enterprise, and has been typically practiced in transition economy banking systems. Further more, the latter technique has been accompanied by accounting treatment which mistakenly recognizes these assets as performing loans, artificially inflating income statements and balance sheet book values.5. Debt-equity Swaps and Loan Sales / Asset SwapDebt-equity swap results in bank ownership of enterprises occur with differing frequencies in different countries. In some countries, bank ownership of enterprises is common (German interlocking directorates), while in other countries it is strictly regulated (USA) or strictly prohibited (In China, debt-equity swap is done through asset management company). By swapping NPL for equity, banks can exercise more directcontrol/supervision over enterprise management while the enterprise benefits from increased debt capacity. The risk to bank is excess exposure to a risky investment which may jeopardize deposit safety and bank capital, and demand scarce management time and resources.Debt-equity swap represents nascent venture capital operation. Perhaps only one in 10 of these investments may succeed, but this should be sufficient to cover the risk of the other nine losing investment. Given existing low book values and the currently thin market that is likely to improve in the coming years, banks are prudent to allocate a small percentage of assets to enterprises they believe will generate significant profit at a later date. At that point, banks can sell their shares, and reap significant profit to bolster capital. All of this makes more sense given the current downside risk, which is limited, as most of these transactions are paper transactions that do not further impair bank liquidity.But bank equity swap may be indicative of the failure of banks in some countries to properly define bank's roles as financial intermediaries, streamline their operations, specialize in a few key areas within the limit of their current managerial and staffing capabilities, write down their assets to more accurate values, and progress toward a more stable and prudently managed system devoid of excess risk. Investment in losing enterprises raises the risk of future liquidity being drained to prop up these enterprises in the hope of eventual profitability, which puts depositors and shareholders at risk.In addition to debt-equity swaps, loan sales swaps are an option that could be used to restructure bank balance sheets. However, this option has not been commonly found in transition economy due to absence of secondary market development.6. Securitization of Non-performing LoanNon-performing loan securitization is a pooling of non-performing loans packaged and issued as securities to investors through arrangements of legal structure, cash flow, and credit rating mechanisms. Non-performing Loans are also known as bad loans, overdue loans, receivables under collection, and loans still under normal payment statuses, but with circulating bonds rated lower than CCC level. During the securitization period, the originator (seller) will select the most ideal portfolio based on a set of eligibility criteria, such as debtors' locations, credit period, currency, and overdue ratings from all available non-performing loans.After the screening process, bank will proceed with the risk assessment, cash flow simulation and credit tranche. The securities are then offered to investors after confirmation from credit rating agencies and regulatory approval obtained. The asset management agency is particularly important to a non-performing loan securitization since the asset management agency's expertise is instrumental to increasing collection rates of these non-performing loans. Investors' risks are minimized through credit enhancement techniques; default risks, prepayment risks, etc. are also emphasized to evaluate the risk profile of non-performing loans.7. In-court Bankruptcy / Liquidation ProceedingsResorting to legal procedures to collect the repayment of non-performing loans is the last defense line. In practice, banks should grasp the timing of litigation. Because blind lawsuits will involve banks' time, energy, money and people. In addition, they could have negative impact on the relationship between banks and their clients.Firstly, before litigation, banks should investigate the borrowers' income resources and asset categories and prevent them from hiding or transferring asset in this period of time. Banks can apply to the court for asset preservation. Secondly, banks should try best to correct the deficiencies of credit documents and win themselves advantageous conditions in litigation. Thirdly, banks should also prepare themselves for the results of reconciliation or failure.Bankruptcy/liquidation is an effective complement to out-of-cnurt approaches, and serves as a last stage of debt collection, providing creditors with control over debtors in financial distress and prompting their restructuring. For this reason, many countries (transition economies) have developed and are seeking to expand the use of formal bankruptcy to broaden the array of dispute resolution mechanisms, provide banks with long needed recourse, and instill greater financial discipline on enterprises.8. Exercise of CollateralWhen a debt matures or is going to mature and the debtor has encountered serious operation difficulties, the debtor cannot repay the loan in cash and the guarantor cannot repay the loan in cash either. Maybe after negotiation, the two parties (the bank and the borrower) or three parties (the bank, the borrower and the guarantor) can reach a consensus. In line with the consensus or the ruling by the court, the debtor or the guarantor can make in-kind repayment of debts, which is one of the important means to dispose of non-performing loans.9. Writing-off Bad LoansIn accordance with relevant state rules and regulation, if the principal of a loan is identified as unrecoverable, the bad loan can be written off. Writing-off of bad loans is the internal activity of a bank. So the bank still enjoys the recourse right and should continue to demand the repayment of the fund.10. ConclusionWere analyzed by the non-performing loans management recycling. Bad credit risk management, there are still many problems to be solved, how the lending business in the international financial place needs to be further research and continue to explore. In short,the management of non-performing loans of China's economic development has made a significant contribution, but there are still shortcomings in their own system, the external competitive environment in the development of the personal loan there are many adverse, which requires countries to fully understand individual housing loans an important role on the basis of, for the banks internal management and external risk management and reasonable planning to ongoing development. Personal loans also have to recognize their own position and where to adopt appropriate strategies and market positioning, innovation, adjustment, reform, focusing on risk management in order to more rapidly grow.ReferencesSteven Husted,Michael Melvin, International Economics [M], (the fifth edition), Higher Education Press, 2002Beck, T., Demirguc-Kunt, A., & Maksimovic, V. (2005). Financial and legal constraints to growth: Does firm size matter? The Journal of Finance, 60, 137–177.Peng, Y. (2004). Kinship networks and entrepreneurs in China's transitional economy. American Journal of Sociology, 109,1045–1074Qian, Y. (2000). The process of China’s market transition (1978–1998):The evolutionary, historical, and comparative perspectives. Journal of Institutional and Theoretical Economics, 156, 151–171.Shane, S., & Cable, D. (2002). Network ties, reputation, and the financing of new ventures. Management Science, 48, 364–381.Newton, K. (2001). Trust, social capital, civil society, and democracy.International Political Science Review, 22, 201–214.Liu, Z. (2003). The economic impact and determinants of investment in human and political capital in China. Economic Development and Cultural Change, 51, 823–850. Birner, R., & Witter, H. (2003). Using social capital to create politicalcapital. In The commons in the New Millennium: Challenges andadaptation (pp. 291–334). Cambridge and London: MIT Press.不良贷款的管理和回收威廉J鲍姆，阿伦S布林德摘要随着我国金融体系建设的进一步发展和市场体制的迅速完善，银行的贷款业务逐渐向个人完全展开，个人贷款的业务种类不断增多，业务范围持续扩大，特别是个人住房贷款业务的发展更为迅猛。

商业银行风险管理Arunkumar Dr. G. Kotreshwar1.序言1.1个风险管理银行业的未来无疑将十分关注风险管理动态，只有行之有效的风险管理系统银行才能在未来的市场中长期生存。

信用风险管理对于经融机构全面风险管理来说是一项重要的、长期的、行之有效的风险管理，由于银行对其本质业务的继承，所以信用风险是其最老、最大的风险管理。

只不过由于各种原因在不久之前获得了重大发展。

其中最要的是在全球范围内一时兴起的经济自由化。

印度也不由自主的走向了这个经济自由化，从而加剧了从内部到外部的国家经济竞争。

无论在数量上还是体制上都导致了市场的动荡，这就导致了风险的多样性。

前期成功的信贷风险管理是一个所涉及的风险信贷，银行风险中定量的每一项投资组合作为组合信用风险。

信用风险管理的基础是建立一个框架，这个框架规定了企业优先级别、信贷批准流程、信用风险评级系统，经过风险调整定价系统，贷款审查机制和全面的报告系统。

1.2研究的意义：单个银行的基本贷款业务给整个银行系统带来了麻烦。

因此，我们必须让银行系统有足够的个别项目的信用评估，评估风险以及整合行业为一个整体。

一般来说，印度各银行通过传统的提案项目融资工具进行评估，计算最大的允许范围，评估管理功能和顶级的处方的行业风险。

由于银行业进行到一个高性能的世界融资和交易中，新的风险，需要的是更加复杂和多样性的系统为风险评估、监测和控制风险敞口。

因此，它是银行管理层装备完全应对需求的创建工具和系统能够评估、监控和风险敞口采用的科学方法。

信用风险，即违约的借款人偿还贷款，至今为止仍是重要的风险管理。

信用风险的支配地位甚至能反映组成的经济资本，银行必须警惕身边有各种针对性的风险。

就统计，信贷风险需要占到70%，剩下的30%是另外两个之间共享的主要风险，即市场风险（变化的市场价格和运营风险失败、内部控制等）质量借款人能够直接进入资本市场而无需通过债务途径。

因此，现在相对较小的借款人贷款途径更加开放。

商业银行贷款损失准备金论文【摘要】经济全球化的不断深入是我国的经济不断得到发展，使得金融业的发展越来越快，对经济的发展也做出了重要的贡献；各金融机构为经济的发展提供了强大的资金支持，其中，处于核心地位的就属商业银行了。

商业银行不但是重要的金融机构而且还可以作为一个会计主体。

在商业银行的众多资产业务中，最具有高风险性的业务就是贷款业务。

因此，如何合理地对商业银行贷款损失准备金计提的问题是人们一直以来关心的一个重要问题。

本文就对我国商业银行贷款损失准备金的会计进行探索，并提出各种合理化的建议，找到一种最适合我国国情的商业银行贷款损失准备金的会计处理方式。

【关键词】商业银行贷款损失准备金会计政策商业银行的主要业务就是吸收存款和发放贷款，是一个国家经济发展的重要做成部分，对一个国家经济的发展有着至关重要的作用。

吸收存款和发放贷款是商业银行的重要资金流转形式，具有重要的地位。

首先，商业银行主要是依靠发放贷款获得的利息作为主要的收入来源，是衡量商业银行的盈利能力和水平的一个重要指标；其次，由于对外发放贷款是一项高风险性的业务，一旦贷款业务在运行过程中出现问题，就会直接影响商业银行的长短期经营，不利于经济的发展。

因此，要切实完善我国的商业银行贷款损失准备金的会计政策。

一、我国的商业银行贷款损失准备金的会计的发展过程（一）上世纪80年代至上世纪末，初步发展阶段当时我国还处在计划经济与市场经济接轨的时期，市场经济的发展才刚刚起步，我国的银行并没有对银行贷款损失准备金作出明确的规范。

后来随着市场经济发展的不断深入，商业银行逐渐演变为一个核心的机构，这就要求商业银行需要一个衡量资产价值的标准，来提高自身的管理能力。

早在1986年国务院就出台了相关的法律条例，首次提出了在专业银行设立呆账准备金的规定。

在1988年财政部《关于国家专业银行建立贷款呆账准备金的暂行规定》的颁布标志着我国银行贷款损失准备金标准的初步形成。

此后，1998年财政部又发布了《关于修改金融机构应收利息核算年限及呆账准备金提取办法的通知》指出：“呆账准备金由按年初贷款余额1%的差额提取改按本年末贷款余额1%的差额提取……”（二）2001至2005年，转型阶段2001年国家财政部颁布的《金融企业呆账准备提取及呆账核销管理办法》对我国的银行贷款损失准备金做出了明确的规范。

论银行贷款损失准备【摘要】贷款损失准备是商业银行抵御风险的重要保障之一。

通过比较商业银行贷款损失准备金的会计准则与监管政策，可以发现两者存在冲突，主要表现在计提理念、计提技术等方面。

新会计准则的实施使得监管政策与会计准则的兼容性问题日益紧迫，与此同时商业银行的实际操作也受到考验。

为此，本文提出了顺利实施新会计准则和完善商业银行贷款损失准备金政策的几点建议。

【关键词】贷款损失准备会计准则监管政策贷款损失准备是商业银行为抵御贷款风险而提取的用于弥补银行到期不能收回的贷款损失准备金。

从监管的角度，银行需要维持足够的贷款损失准备以抵御预期风险；从会计计量的角度，银行需要计提减值准备以准确反映贷款资产价值。

因此，贷款损失准备一直备受银行业监管部门与会计主管部门的共同关注。

一、问题的提出近年来，我国商业银行贷款损失准备金的计提政策主要有2001年财政部颁布的《金融企业会计制度》、2002年中国人民银行发布的《银行贷款损失准备计提指引》、2002国家税务总局颁布的《金融企业呆账损失税前扣除管理办法》和2005年财政部下发的《金融企业呆账准备提取管理办法》及《金融企业呆账核销管理办法》。

这些法规政策对商业银行风险准备的定义、种类、范围、计提方法、呆账核销中的会计处理及税收等都作出了明确规定，初步形成了一套具有中国特色的风险准备政策体系。

与此同时，国际会计准则委员会从2001年正式运行以来，加快了国际准则的建设步伐与全球推广，欧盟、澳大利亚、新西兰、新加坡、香港等从2005年开始正式采纳和实施多项国际会计准则，其中包括与银行风险准备密切相关的《国际会计准则第39号——金融工具确认和计量》（IAS39）。

我国财政部为实现与国际财务报告准则的趋同，于2006年2月发布了39项新会计准则，要求上市公司自2007年1月1日开始执行，其中与商业银行贷款损失准备密切相关的是《企业会计准则第22号——金融工具确认和计量》（本文称为新会计准则）。

商业银行贷款损失准备计提的会计处理商业银行的资产业务，尤其是贷款业务，通常面临着较多的风险。

为了应付可能发生的损失，避免陷入经营困境或破产，商业银行需要在估计风险和损失的基础上，提取资产损失准备金。

对贷款计提损失准备，虽然已经成为一种国际惯例，但是，由于各国的情况千差万别，各国商业银行在贷款损失准备计提的会计处理上也有所不同。

一、商业银行贷款损失准备计提会计处理的一般原则（一）谨慎性原则谨慎性原则是会计核算的基本原则，又称为稳健性原则。

根据谨慎性原则的要求，企业在对某些经济业务和会计事项进行会计处理时，如果有不同的会计处理方法和处理程序可供选择，那么，在不影响合理选择的前提下，企业应当尽可能选择使用不虚增利润和夸大所有者权益的会计处理方法和程序，从而合理核算可能发生的损失和费用，真实反映企业的经营状况。

对所有行业来说，稳健经营基本上都是通行的准则。

但是，相对于许多其他行业而言，由于商业银行贷款具有很高的风险伴生性，银行业的风险更加广泛和集中。

因此，稳健经营在银行业中的重要性较一般行业更高，从而作为会计核算基本原则的谨慎性原则，在银行业会计核算中的执行标准和要求也应比一般企业更高和更加严格。

（二）完全覆盖原则损失准备的完全覆盖原则，则是具体的适用于贷款损失准备计提的针对性原则。

根据这一原则，银行在对贷款提取损失准备金时，必须充分估计贷款可能遭受的损失，并足额提取准备金，以预防可能发生的流动性不足引致的经营风险。

对于当前世界范围内的绝大多数商业银行而言，贷款依旧是最主要的资产业务，贷款收入则是最重要的收入来源，只有极少数的商业银行例外；即使是这极少数的银行，贷款和贷款收入也依旧是其资产业务的重要部分和其收入的重要来源。

因此，贷款风险管理是任何一家商业银行管理的核心内容，提取贷款损失准备金则是国际通行的贷款风险管理惯例。

如果银行提取的损失准备金不能完全覆盖风险或损失，那么，一旦损失形成，就会直接侵蚀银行的资本金。

商业银行的资产负债管理平衡风险和收益的关键策略在现代金融体系中，商业银行的资产负债管理被认为是其日常经营的核心活动。

资产负债管理的目标是平衡银行的风险和收益，确保银行能够有效地满足客户和监管机构的需求。

本文将介绍商业银行在资产负债管理方面所采取的关键策略。

一、资产负债管理的基本原则资产负债管理的基本原则是风险与收益的平衡。

商业银行作为金融中介机构，通过接受存款、发放贷款等活动，将资金从资金供给者转移给资金需求者，并从中获取盈利。

然而，银行也面临各种风险，包括信用风险、市场风险、流动性风险等。

因此，资产负债管理需要综合考虑风险和收益的关系，以确保银行的盈利能力和稳定性。

二、资产负债管理的核心策略1. 资金成本管理商业银行通过不同渠道筹集资金，包括吸收存款、发行债券等。

资金成本管理旨在降低银行的资金成本，以提高盈利能力。

银行可以通过合理定价、控制资金成本的浮动范围、优化流动性管理等策略来实现资金成本的降低。

2. 资产配置管理资产配置管理是指银行在资产端选择合适的资产组合，以满足客户需求和实现收益最大化。

商业银行可以通过有效的风险管理手段，根据不同资产类别的风险特征和收益预期进行投资组合的配置。

同时，银行还需要优化资产负债结构，确保资产与负债的匹配程度，以减少风险敞口。

3. 风险管理商业银行面临着多种风险，包括信用风险、市场风险、流动性风险等。

风险管理是资产负债管理的核心内容之一。

商业银行可以通过建立有效的风险管理框架，包括风险监测、风险评估、风险对冲等措施，来降低风险对银行经营的影响。

4. 监管合规商业银行必须遵守监管机构的规定和要求，确保符合法律法规和监管政策。

资产负债管理需要与监管合规相结合，以确保银行在经营过程中符合监管要求，并及时采取相应的措施以应对变化的监管环境。

三、资产负债管理的挑战与发展趋势1. 利率风险商业银行面临着利率变动的风险，这可能对其资产和负债之间的匹配程度造成影响。

为了规避利率风险，银行可以采取利率敏感度测试、套期保值等策略。

本科毕业论文（设计）外文翻译原文：Using Activity-Based Costing (ABC) to Measure Profitability on aCommercial Loan PortfolioThe competitive environment in the banking/financial institution industry has made it very difficult to increase revenues and market share that is sufficient in growth and maximizing shareholder's wealth. The minimal growth in the area plus the over saturation of banks, financial institutions and other sectors (mortgage companies, insurance agencies, internet companies, etc.) competing for the traditional banking products has forced banks to look at ways to control their costs to reach the profitability levels that are necessary to appease their shareholders.The only way to control expenses is to have a better understanding of how certain products and how they are setup to contribute to the overall expenses in day to day operation of a bank. The traditional costing system in banking does not effectively assign actual costs to the actual transaction. This is where activity-based costing will give bank managers a greater understanding of the true cost and profitability of all transactions in daily processes in the bank.Activity-based costing can be used in all areas of banking, and in some banks it is used in analyzing checking accounts for businesses. However for this study, we will be looking at how activity-based costing can be used to determine the true profitability of all commercial loans transitions in the small community bank.Commercial loans represent 81.26% of the bank's total loan portfolio as of December 31, 2006. So it is a major contributor to the overall revenue of the bank. However, commercial lending also represents a major expense of the bank. In general, the commercial lender and the Chief Credit Officer, manage the commercial lending portfolio. Aside from the Chief Executive Officer, these two officers have the twohighest salaries in the bank. Also, commercial loans have to be managed a lot more closely with the review of financials and monitoring of collateral that is not required with other loans. This adds expense due to the lender's time, but the loan assistant has to take time to collect the needed data and performed other tasks that will be mentioned later in the study.The institution is a small-community bank entering its 7 year of existence. As a relatively new, small-community bank, there are many advantages that can be levered towards better customer service. These advantages come from the ability to make approvals and decisions fast and locally, which eliminate a lot of red tape from the larger corporate-ran-banks. Also, decisions can be based on a case-by-case basis instead of whether the customer is a Tier 1 or Tier 4 determining what level of service the customer would receive.However, there are some disadvantages in the cost area. First, the bank is more dependent on Certificate of Deposits (brokered and local), Federal Home Loan Bank lines of credit, and Federal Funds Purchased. These funding sources are typically much more costly than demand deposits, savings, and money markets. Typically, the small-community bank cannot and does not have the resources to market and obtain these "cheaper" deposits. Also, the limited amount of locations sometimes limits the amount of checking and savings accounts the bank can open for the customers. This bank has 63.43% of its total deposits tied up in Certificate of Deposits. To make a comparison; other bigger banks in the same market (Old National Bank) has 41.13% of its total deposits in CDs.The other main disadvantage is the economies of scale that the large corporate bank has over the small-community bank. These savings are found in centralization, and more directly in salary savings in certain tasks. This bank has Chief Credit's officers' salary or the commercial lender's salary cost when doing the analysis to underwrite the credit or perform the annual analysis after the credit is booked. The large corporate bank has analyst making approximately half the salary taking care of the same work. This, also, allows its higher paid lenders to spend its time locating new business in the market place.Traditionally, when community bank attempts to determine the profitability of a credit, most of the costs are simply allocated to the credit based on its percentage of the total overall portfolio. These costs are salaries, cost of funds, and provision of loan losses. This methodology would be appropriate if all credit were created equal. However in reality, no two credits are alike. Some credits take a lot of management, while some credits go on the books and require little additional work.Without a true understanding of the cost of a credit, it makes it difficult for bank management to decide what business are the best credits to use its resources to pursue. To obtain a better understanding on more accurate actual cost, a bank should consider implementing an activity-based costing.The Activity-Based Costing (ABC) process attempts to give a better understanding and accurate assessment of the costs associated with producing a product or service and delivering it to its end-users. It looks at the activities associated with producing the product and service and the amount of resources that are required for these activities.ABC is further defined as:1. A more accurate cost management methodology2. Mostly focuses on indirect costs (overhead)3. Traces rather than allocates each expense category to the particular cost object4. Makes "indirect" expenses "direct"One of the reasons to use ABC system is when there is a lot of competition. As stated earlier in this study, the over saturation of banks, financial institutions and other sectors competing for tradition banking business provides a competitive environment that requires the need for a better understanding of costs, which makes the use of ABC imperative to obtain the levels of profitability required by the company and shareholders.The five steps of the ABC process are: Identify Activities, Determine Cost of each Activity, Determine Cost Drivers, Collect Activity Data, and Calculate Product Cost.The following have been determined as the necessary activities when making aloan at the bank.Underwriting - This is the process where the loan officer reviews the financials of the borrower to determine if the bank should extend credit. Depending on the total committed liability to the borrower, there are more steps required to complete underwriting. Also, the higher the committed liability, the loan officer may have to present the credit to the CCO, CEO, Board Loan Committee, or the entire Board of Directors.Documentation Preparation and Set-up on System—The more complex the credit, the more time it takes for the loan assistant to produce the needed documentation and set-up of the loan on the bank system.Review of Documents and Closing of Loan—The loan officer must review the documents for accuracy, and then must perform the loan closing.Cost of Funds—Loans are funded through deposits in the bank or from borrowings from the Federal Home Loan Bank and/or Federal Funds Purchased.Provision for Loan Loss—Each loan requires a portion of the income set aside as a provision for loan loss. This information goes to the Allowance to Loan Loss, which is an asset account set aside to cover losses when bad loans are charged off.Payment—Payments can be made either manually or electronically. Manual payments require the loan assistant to produce tickets to apply the payments to the system. On Revolving Lines of Credits, there may be extra payments made as principal reductions.Loan Advances—In a line of credit, all the money is not taken out at closing so later on funds must be advanced to the borrower. If the customer has a checking account, the funds can be directly deposited in their account. If not, a cheek must be written and sent or picked up by the customer.Maintenance—Sometimes payments or advances are miss-posted so this requires the loan assistant to make corrections on the system.Insurance Follow-up—The loan assistant must follow up with insurance agencies to make sure that loans with collateral have insurance still in place during the life of the loan.Collection of Financials—At certain levels of borrowings, the bank requires yearly financial information to do annual reviews. The loan assistant sends letters to request financial information and updates the credit files. In most instances, the processor has to make copies of the financials.Annual Reviews—The loan officer annually reviews the financial information collected on each borrower to review the company's performance. The review is used to determine that a credit is properly risk rated (the rating determines how much should be reserved in the loan loss for the potential loss) and to determine if there is any action plan needed by the bank.Calculate Product CostSince the activities have been identified, costs of each activity determined, the cost drivers determined, and data collected, one can now calculate the cost of each loan and determine the remaining profitability after subtracting the costs from the interest income plus loan fees. Exhibit 2 takes the collected data and converts it to an actual cost figure. These cost figures are now subtracted from interest income and loan fees. The exhibit shows the profitability of each credit under ABC system.Traditional Costing NumericallyAs mentioned earlier, banks usually use traditional costing to determine the profitability of a loan. For this bank. Interest Income, Loan Fee, and Cost of Funds are determined by the same method as it is in ABC. The difference comes in the Provision, Loan Processor Cost, and Loan Officer Cost.For the provision, the total cost is divided by the total loan portfolio, and then multiplied by the balance of the loan to determine the loan's portion of the provision. On the Loan Processor Cost, processor is responsible for the entire commercial loan portfolio. So processor's salary is divided by the entire commercial loan portfolio, and then multiplied by the balance of each loan to determine processor's allocated cost for each loan. The loan officer's salary is divided by the portfolio, and then multiplied by the balance of each loan. This amount is then allocated to each loan.ConclusionTraditional costing is much easier to calculate than ABC. So the question is, whywould one choose to use ABC? ABC gives a true cost for a loan compared to traditional costing, which allocates most of the expenses more accurately. Banking has become very competitive, and it has become imperative that banks like any other businesses allocate their resources to the most profitable areas.What did our research study show on a commercial loan portfolio at a small-community bank? First let's look at Exhibit 4, which shows the profitability of the same loans under ABC and Traditional Costing systems.In all loans, except for 3 (#3, 5, and 6), ABC system shows greater profit than Traditional system. Why is this and what can be concluded from this result?First, when we look at the three loans that differ from the majority. Loans #5 & 6 were the only two loans that were in the under $50,000 in underwriting. This shows that if expenses are not allocated. These loans are not as profitable for the bank because there is not a whole lot of relief on costs because a similar amount of work is required. The only really break is in the cost of funds and provision. Loan #3 is similar to the other two in the fact that it is small in size. However, since it is a part of a larger relationship, it had to be taken to the BOD for approval so a lot more underwriting work was required.What ABC system shows us here is that the bank needs to look at a junior lender at a smaller salary to handle these smaller loans. This may also shows us that the loan officer has a lot of smaller relationships that are taking to much time and takes away from securing larger relationships that do not cost as much as the smaller loans when looked at cost as a percentage of loan balance. The regular lenders compensation needs to be concentrated in the larger loans. Finding accurate cost is one of the best ways to increase profitability of the bank to maximize shareholder's wealth. The final conclusion is that there are some work hours that are not accounted for in ABC system. This is reflected in profitability being higher in almost all loans in ABC system when compared to Traditional system. However, most of these hours can be attributed to prospecting for business and attending civic events. With these so-called non-production hours or non-value added activities, it is imperative that the production hours are maximized and productivity increased to help company's overallprofitability.Source: Mehmet C. Kocakulah 2007. “Using Activity-Based Costing (ABC) to measure profitability on a commercial loan p ortfolio”. Journal of Performance Management. September, pp.29-46.译文：利用作业成本法（ABC）衡量商业贷款组合的盈利能力在银行等金融机构行业的竞争环境中，要想增加收入和已经获得足够成长和股东财富最大化的市场占有率已经非常困难了。