A financial institution’s ability to maintain profitability through times of economic certainty or uncertainty is undoubtedly impacted by its careful management of the credit portfolio. Protiviti’s Credit Pulse is intended to provide a summary and analysis of economic indicators impacting financial institutions and the strength of their credit portfolio while providing industry-leading insights and pragmatic recommendations to address areas of weakness.
Read The Latest Credit Pulse (October 2020)
As COVID-19’s shockwaves continue, credit portfolio managers are finding that an advanced degree in behavioral psychology might come in handy. Economic indicators affecting the strength of credit portfolios hinge on:
- An interrelated collection of underlying decisions and behaviors by federal legislators, banking supervisors and borrowers;
- Continually evolving perceptions about health risks; and
- Corresponding recommendations from healthcare professionals and governments about virus containment measures.
While it is as important as ever for financial institution leaders to focus on capital adequacy, asset quality, management capability, earnings and liquidity, they must be more sensitive to an expanding set of credit-related risks as well as to changes in borrower behavior.