Loan portfolio management at JSC "First Ukrainian International Bank"
Students Name: Harhas Andrii Yaroslavovych
Qualification Level: magister
Speciality: Finance, Banking and Insurance
Institute: Institute of Economics and Management
Mode of Study: full
Academic Year: 2020-2021 н.р.
Language of Defence: ukrainian
Abstract: Gargas A.Ya., Demkiv O.I. (supervisor). Loan portfolio management of JSC "First Ukrainian International Bank". Master’s thesis. - National University "Lviv Polytechnic", Lviv, 2020. Extended annotation During the formation of the economic system of Ukraine, one of the main tasks of the banking system is to create favorable conditions for a continuous production process, primarily through meeting the needs of businesses in borrowed capital [1]. Credit is an important source of financial resources for investment and plays a very important role in expanded reproduction. Bank credit is one of the main forms of lending to businesses and individuals. Loans are one of the traditional banking services. Lending is a special role of this type of business for the bank, as the profit from its implementation not only occupies a leading position in the structure of the bank’s income, but largely constitutes the overall development strategy of the institution [2]. The success and efficiency of bank credit investments in various sectors of the economy largely depends on the ability of the bank’s management to optimize the formation and management of loan portfolios to ensure the achievement of appropriate banking efficiency with the least level of risk [3]. The study summarized the theoretical foundations of the bank’s loan portfolio management, in particular analyzed the different views of domestic and foreign scholars on the nature and role of the bank’s loan portfolio, considered approaches to loan portfolio management and classification of its segments by key indicators, identified nature, functions and stages of development credit policy of the bank [5]. An analysis of the financial condition of JSC "First Ukrainian International Bank" using horizontal and vertical analysis of the balance sheet and statement of financial performance. During the analyzed period, there is an increase in assets of JSC "FUIB", which is mainly due to the growth of customer loans, cash and cash equivalents, the right to use assets, fixed assets. However, some asset items have decreased significantly, such as debts of other banks and securities that are measured at fair value through other comprehensive income. The increase in liabilities is caused by an increase in customer funds, other liabilities and issued certificates of deposit. However, indebtedness to other banks decreased. The bank’s equity increased due to the growth of retained earnings. JSC "FUIB" different types of loans for legal entities depending on the purposes of use and forms of repayment: overdraft; term loans; credit lines (revolving and non-revolving); loans through the EBRD and NUF; factoring; forfaiting; leasing loan; provision of bank guarantees. Along with lending to legal entities, JSC "FUIB" provides a wide range of lending services to individuals, in particular: car loans; housing on credit; goods on credit. During the analyzed period, the bank maintained and increased its position in the corporate lending market. Also, the bank’s share in the retail lending market increased. In the structure of loans to customers, the largest share during the analyzed period were loans to individuals. The share of loans issued to clients engaged in trade and providing agency services during 2017-2019 decreased. There is an increase in the share of loans issued to customers working in the food industry and agriculture. In the research and forecasting part of the work, a SWOT analysis was conducted, which demonstrated the opportunities and threats, as well as the strengths and weaknesses that are characteristic of JSC "FUIB". Based on their comparison, strategic alternatives were developed. Based on economic and mathematical modeling to determine the optimal structure of the loan portfolio depending on the type of borrowers. Forecasting the size of the loan portfolio and assets using the method of least squares allowed to identify the trend of their change and size in the future. The recommendation contains a description of theoretical and practical measures for the introduction of an updated lending algorithm, which is based on control over credit operations and bringing the structure of the loan portfolio to the optimal value depending on the type of borrower may positively affect the bank’s financial performance in the future. The object of research is the bank’s loan portfolio. The purpose of the study is to analyze the loan portfolio management of a commercial bank and develop recommendations for improving the loan portfolio management of a commercial bank. Objectives of the study: generalization of the theoretical foundations of bank loan portfolio management; analysis of the financial condition of JSC "FUIB"; analysis of FUIB’s loan portfolio; SWOT-analysis of JSC "FUIB" activity; economic and mathematical modeling of the loan portfolio structure of JSC "FUIB"; forecasting the size of the loan portfolio and assets of JSC "FUIB"; development of recommendations for improving the loan portfolio management of JSC "FUIB" and assessing their impact on the bank’s financial condition. Key words: bank, loan portfolio, interest income, management. Literature: 1. Borisova S.E. (2017). Economic and mathematical modeling and forecasting the volume of credit and borrowed funds of a banking institution / SE Borisova, OV Balashova // Economic Bulletin of Donbass, 3 (49), 75–82. 2. Kigel V. (2010). On determining the optimal loan portfolio of the bank in terms of risk of non-return of funds to borrowers / V. Kigel // Bulletin of the National Bank of Ukraine, 1, 15–17. 3. Kryuchko L.S. (2017). Credit Portfolio Management of a commercial bank / L.S. Kryuchko, A.V. Sidorenko // Electronic scientific professional publication of Mukachevo State University "Economics and Society", 13, 1139-1142 4. Makarenko Y.P., Samoilova D.O. (2020). Theoretical aspects of credit portfolio management of a banking institution // Economy and State, 6, 87-91 http://www.economy.in.ua/?op=1&z=4656&i=12 5. Polova O.L., Petrenko V.B. (2020). Analysis of the loan portfolio of commercial banks of Ukraine in modern conditions // ECONOMIC SCIENCES, 51, 39-44. - Access mode: http://www.tsh-journal.com/ wp-content / uploads / 2020/10 / VOL-5-No-51-51-2020.pdf # page = 39