Credit Analysis is nothing but determining the credibility, i.e. financial viability of any project, firm or an individual. Suppose, Company A wants to start a new venture in an overseas geographical segment. For this, it seeks loan from a commercial bank to procure funds. Before the bank grants loan on the basis of project finance report, it as to check its financial credibility. This is where credit analysts come into picture. They need to check the creditworthiness of the firm, on the basis of its past performance, i.e., repayment of liabilities, free assets available, existing loans, revenue generating capacity of the firm, existing tax litigations, etc. Thus, the job profile of a credit analyst is not an easy one, since the credit rating impacts how much financially healthy you’re considered in the economy. A bad report will result into the firm being deprived of loans, or at a higher interest rate, which might be financially loss making for them.
On this note, let’s explore the job profile of a credit analyst –
At the entry level, candidates join as Analysts. They typically have MBAs in finance or are CAs.
- Credit Analysts receive new cases from teams within their own companies or from clients
- The key job is to assess the credit profile of the entity being analyzed. The Credit Analyst goes through all relevant data pertaining to the entity, including business plans, source of funding, risks as well as industry-wide data. In some cases, they may have to visit the site of the company to get operational data
- After all the information is gathered, the analyst puts together the Credit Analysis Report and comes up with the recommendation on whether a loan can be given or the rating for the company.
- These recommendations are then presented to seniors / rating boards / clients.
Companies to target:
- Rating Agencies: CRISIL, CARE, ICRA, Fitch Ratings (India), Brickwork Ratings
- Banks and Financial Institutions: ICICI, HDFC, Kotak, IndusInd, Deutsche Bank, Credit Suisse, HSBC, Citi
- Third party vendors (KPOs): Aranca, Genpact, Dun Bradstreet