Credit Risk Analysis for Commercial Bank Analysts Training Course

Course overview

Commercial credit decisions depend on more than spreading financial statements and calculating ratios. Analysts must determine whether reported earnings convert to cash, whether debt capacity can withstand downside conditions, how collateral performs under stress, and whether a proposed structure fits the bank’s risk appetite. Weaknesses in any of these areas can lead to avoidable downgrades, covenant breaches, impaired exposures, or credit papers that cannot withstand challenge from senior credit officers, auditors, or regulators.

This five-day course develops the analytical and judgement skills required to assess corporate, SME, and mid-market lending proposals. Participants examine borrower business models, spread and normalise financial statements, analyse working-capital cycles, calculate debt-service capacity, assess leverage and liquidity, build cash-flow forecasts, and conduct scenario and sensitivity analysis. The course also covers collateral assessment, covenant design, risk ratings, early-warning indicators, Basel III capital considerations, and IFRS 9 staging and expected credit loss concepts relevant to front-line credit analysis.

Instruction combines technical teaching with lending cases modelled on real commercial-bank workflows. Participants work in Excel to analyse a borrower, identify accounting-quality concerns, test base and downside repayment capacity, recommend covenants and security, and prepare a concise credit memorandum. They leave with a completed borrower credit file, an Excel-based financial analysis and stress-testing workbook, and a structured approach for presenting a well-supported recommendation to a credit committee.

The course is designed for professionals who already work with commercial lending information and need to improve the quality, consistency, and defensibility of their credit assessments. It is particularly relevant where analysts are moving from data gathering and financial spreading into independent underwriting, portfolio monitoring, or credit-committee presentation responsibilities.

Course objectives

By the end of this course, participants will be able to:

• Spread and normalise borrower financial statements to produce an analytically reliable credit view
• Calculate liquidity, leverage, coverage, profitability, and working-capital ratios using commercial lending benchmarks
• Build an operating cash-flow and debt-service capacity analysis in Microsoft Excel
• Assess repayment sources, borrowing-base support, collateral coverage, and security enforceability considerations
• Apply qualitative business-risk analysis covering industry position, management quality, customer concentration, and supplier dependence
• Run base-case, downside, and sensitivity scenarios to quantify covenant headroom and default risk
• Assign and justify an internal borrower risk rating using probability-of-default drivers and early-warning indicators
• Produce a credit memorandum with a recommendation, conditions precedent, covenant package, and monitoring plan

Benefits of attending

Target competencies

Who should attend

• Credit Risk Analysts — who assess commercial borrower performance and prepare recommendations for credit approval
• Commercial Banking Analysts — who support relationship managers with financial analysis and lending proposals
• Credit Underwriters — who need stronger cash-flow, covenant, collateral, and downside-risk assessment methods
• Relationship Managers — who originate corporate or SME facilities and must structure bankable lending proposals
• Portfolio Managers — who monitor existing commercial exposures for deterioration, breaches, and refinancing risk
• Credit Officers — who challenge lending submissions and require a consistent framework for approval decisions

Requirements and prerequisites

Participants should have practical exposure to commercial lending, corporate finance, or borrower financial statements. They should be able to read an income statement, balance sheet, and cash-flow statement; understand basic accounting terms such as EBITDA, depreciation, receivables, inventory, debt, and equity; and use Microsoft Excel for formulas, sorting, and simple charts. Experience preparing credit applications, reviewing annual accounts, or supporting relationship managers is helpful. Prior knowledge of Basel III, IFRS 9 modelling, advanced valuation, programming, or specialist credit-rating software is not required; these concepts are introduced at an applied analyst level.

Training methodology

The course uses instructor-led credit analysis sessions, guided Excel modelling, and progressive commercial lending cases. Participants analyse a borrower from initial information pack through to approval recommendation, working with financial statements, management forecasts, debt schedules, security details, and covenant proposals. Small-group credit-committee discussions require participants to defend assumptions, identify missing information, and challenge peer recommendations. Daily exercises build components of a credit file, while the final session converts the completed case into an individual workplace application plan for a current or upcoming lending review.

Course outline

Day 1: Commercial Credit Foundations and Borrower Risk Assessment

• Commercial lending lifecycle from origination to monitoring and recovery
• Five Cs of credit applied to corporate and SME borrowers
• Business-model analysis and identification of primary repayment sources
• Industry-risk assessment using cyclicality, competition, and regulatory exposure
• Management-quality assessment and governance red flags
• Credit-policy alignment, risk appetite, and delegated lending authority
• Borrower information requirements and credit-file completeness testing

Workshop: Participants review an initial borrower information pack, identify material information gaps, and produce a preliminary risk-assessment checklist.

Day 2: Financial Statement Analysis and Cash-Flow Underwriting

• Financial statement spreading and mapping of account classifications
• Normalisation of EBITDA for non-recurring items, owner remuneration, and related-party transactions
• Quality-of-earnings analysis and reconciliation from profit to operating cash flow
• Working-capital cycle analysis using days sales outstanding, inventory days, and payable days
• Liquidity analysis through current ratio, quick ratio, and cash conversion cycle
• Leverage and debt-service coverage calculations including Net Debt to EBITDA and DSCR
• Treatment of leases, shareholder loans, contingent liabilities, and off-balance-sheet exposures

Workshop: Participants spread three years of borrower accounts in Excel, calculate core credit ratios, and write a financial-performance commentary.

Day 3: Forecasting, Stress Testing, and Facility Structuring

• Driver-based revenue, margin, working-capital, and capital-expenditure forecasting
• Construction of integrated profit and loss, balance sheet, and cash-flow forecasts
• Debt schedule modelling for term loans, revolving facilities, and bullet maturities
• Base-case debt-service capacity and free-cash-flow analysis
• Downside scenarios for revenue decline, margin compression, interest-rate increases, and delayed collections
• Sensitivity analysis for covenant headroom and refinancing capacity
• Facility sizing, tenor, amortisation, and repayment-profile design

Workshop: Participants build a base and downside cash-flow model, test repayment capacity, and recommend a maximum facility structure.

Day 4: Collateral, Covenants, Risk Ratings, and Portfolio Monitoring

• Security hierarchy, guarantees, debentures, charges, and intercreditor considerations
• Collateral valuation, haircuts, concentration limits, and realisation risk
• Borrowing-base analysis for receivables, inventory, and asset-based lending
• Financial covenant selection including leverage, interest cover, DSCR, and minimum liquidity tests
• Covenant definitions, testing frequency, cure rights, and waiver controls
• Internal risk-rating drivers, probability of default, and rating migration
• Early-warning indicators and watchlist triggers for commercial loan portfolios

Workshop: Participants design a security and covenant package for the case borrower and create a monitoring trigger matrix.

Day 5: Credit Memoranda, IFRS 9 Context, and Credit Committee Decisions

• Credit memorandum structure from executive summary to approval conditions
• Evidence-based articulation of key risks, mitigants, and residual risk
• Recommendation writing for approve, approve with conditions, defer, or decline decisions
• IFRS 9 staging concepts and expected credit loss inputs for commercial exposures
• Basel III capital and risk-weighted asset considerations for lending decisions
• Credit-committee challenge techniques and response to approval queries
• Post-approval monitoring plans, annual review requirements, and escalation actions

Workshop: Participants complete and present a credit memorandum for the case borrower, defending their recommendation before a simulated credit committee.

Tools & standards covered

Microsoft Excel, Moody's Analytics RiskCalc, IFRS 9, Basel III

A typical training day

Live online deliveries follow the same structure in the East Africa Time zone, with shorter screen blocks and longer breaks.

What the fee includes

How you can take this course

Certification

Participants who complete the full five days receive the Skillset Development Certificate of Completion, stating the course title, course code, dates and delivery format — suitable for professional-development records and employer reimbursement.

Frequently asked questions