Credit Proposal: Building a Connection

Challenge

I am currently working as a Credit Analyst in a bank and one of my challenges is to convince the Credit  Committee to lend to a potential borrower. Our team is presented client’s information – principals’  profile, main business activity, operations, financial performance and position, funding, and risks  encountered. We use all these gathered information to build a story and to assess areas where the bank  could be of most help to our clients.

Selection

An effective tool in relaying a potential borrower’s financial performance, reflected in its financial  statements, is interpreting it in a manner that it will be easily understood, thus conveyed through a  story. Storytelling helps us translate data and build connection from borrowers to lenders; from  knowing our clients, to laying down facts, to reflecting, to formulating analysis, to coming up with a  sound recommendation and decision.

Application

A credit proposal is our medium in storytelling. As numbers, ratios, and ratings may have different  interpretations, a credit proposal is where the analysts and evaluators establish a common and objective  ground. Our clients’ data are presented in a narrative form stating significant information and events  relative to their businesses. A credit proposal is a translation of clients’ presented data in the bank’s  preferred language.

Insight

As we study the data provided by our clients, we learn their strengths and areas of improvement, thus  putting the bank in a position that brings significant positive effects in our clients businesses – optimizing  assets, minimizing expenses, and zeroing out losses.

For example, a client’s data show that its warehouse is currently under a lease agreement and huge  chunk of its revenues is allotted to the warehouse’s rental fee. Analyzing the client’s financial statements  and translating it to a story that will be easily understood by the evaluators and approvers, it showed  that the business is highly profitable and there could be better ways of managing their expenses –  innovating its asset and expense management. Considering each and every aspect of the business, the  credit committee approved a loan to bridge finance the purchase the said warehouse which would  optimize their cash which will then benefit them in the long run.

Approach

I have learned that Storytelling approach is an effective tool in innovating and looking for ways on how  to meet our clients’ needs. We present stories of our clients through credit proposals and use them to  build a connection between our clients and the bank’s approvers.

/JAVR

