BOI Credit Officer key terms

A measure comparing a borrower's operating cash flow with debt service obligations, showing how many times available cash can cover scheduled principal and interest payments during a period.

The ratio of a borrower's net operating income or EBITDA to total scheduled debt service, indicating the margin of cushion before cash shortfalls threaten repayment.

Earnings before interest, taxes, depreciation, and amortization, a proxy for operating cash generation used to compare profitability across firms with different capital structures and tax positions.

A measure of debt relative to equity or assets, such as total liabilities divided by tangible net worth, showing how much of the business is funded by creditors rather than owners.

Current assets minus current liabilities, representing the short-term liquidity buffer a business uses to fund day-to-day operations and absorb timing mismatches in cash flows.

The number of days between paying suppliers and collecting cash from customers, calculated from inventory days plus receivable days minus payable days; longer cycles consume more working capital financing.

A breakdown of receivables or payables by how long they have been outstanding, used to judge collection quality, detect deteriorating counterparties, and estimate provisioning needs.

Total equity less intangible assets such as goodwill and capitalized software, giving a conservative measure of the owners' real capital at risk in the business.

An ordered set of grades, from strongest to weakest, assigned to borrowers or facilities to summarize default probability and loss severity consistently across a portfolio.

The estimated likelihood that a borrower will fail to meet a contractual obligation within a defined horizon, usually one year, expressed as a percentage or basis points.

The share of exposure expected to be lost if a borrower defaults, after accounting for collateral recoveries, guarantees, and workout costs; equals one minus the recovery rate.

The statistically anticipated credit loss on an exposure, commonly computed as probability of default multiplied by loss given default multiplied by exposure at default.

The total amount owed by a borrower at the moment of default, including drawn balances plus a portion of undrawn committed lines that may be drawn before default.

The movement of borrowers between rating grades over time, tracked through a transition matrix to monitor portfolio credit quality drift and validate rating models.

A contractual condition in a loan agreement requiring the borrower to maintain specified financial levels or to refrain from certain actions, giving the lender a trigger for intervention.

A covenant in which the borrower promises not to grant security over its assets to other creditors without the lender's consent, protecting the lender's ranking and recovery prospects.

A clause ensuring that a lender's claim ranks equally with other specified creditors, preventing subordination to later or unsecured obligations of the same borrower.

The ratio of the appraised or discounted value of pledged assets to the outstanding loan amount, indicating the cushion available to recover funds on enforcement.

Setting loan interest rates and fees to reflect expected loss, funding cost, capital charge, and target return, so that riskier borrowers pay proportionately more.

Risk-adjusted return on capital, calculated as risk-adjusted profit divided by economic capital consumed, used to judge whether a facility earns enough to justify the risk taken.

The amount of capital a bank holds internally to absorb unexpected losses at a chosen confidence level, distinct from regulatory minimum capital requirements.

An observable indicator such as overdraft reliance, delayed financial reporting, or tax arrears that flags rising credit deterioration before default or formal delinquency occurs.

A register of exposures showing signs of weakness but not yet classified as non-performing, subject to closer monitoring, more frequent review, and possible remedial action.

A concession granted to a borrower in financial difficulty, such as reduced payments or extended maturity, due to inability to meet original terms rather than commercial choice.

An exposure that is materially past due or where the borrower is unlikely to repay in full without realizing collateral, typically triggering suspension of interest accrual and provisioning.

The charge recognized in the income statement to build loan loss allowances, reflecting expected credit deterioration and reducing the carrying value of loans on the balance sheet.

The structured process of negotiating with a distressed borrower to restructure, refinance, or enforce security in order to maximize recovery on an impaired exposure.

The proportion of an exposure ultimately recovered through repayments, collateral realization, or guarantees after a default, expressed as a percentage of the defaulted amount.

A regulatory measure of a bank's capital relative to its risk-weighted assets, ensuring sufficient buffer to absorb losses and meet minimum supervisory requirements.

Total exposures adjusted by supervisory risk weights, used as the denominator in capital adequacy calculations so that riskier assets require more capital backing.

The mandatory process of identifying clients, verifying beneficial ownership, and understanding their business and source of funds before establishing or maintaining a relationship.

Laws, regulations, and internal controls designed to detect and prevent the laundering of criminal proceeds through the financial system, including monitoring and suspicious activity reporting.

The natural person who ultimately owns or controls a legal entity or account, identified through ownership thresholds or control tests for customer due diligence purposes.

A supervisory ratio requiring banks to hold enough high-quality liquid assets to survive a thirty-day stress outflow scenario, supporting short-term funding resilience.

A supervisory ratio comparing available stable funding with required stable funding, encouraging banks to fund long-term assets with stable liabilities over a one-year horizon.

The risk that changes in interest rates reduce net interest income or economic value of equity from mismatches between repricing dates of assets and liabilities.

A technique comparing rate-sensitive assets and liabilities across repricing buckets to quantify exposure to interest rate movements and inform hedging or pricing decisions.

A basis of accounting recognizing revenue when earned and expenses when incurred, regardless of cash timing, producing receivables and payables that analysts must assess for collectability.

A reduction in the carrying amount of an asset when its recoverable amount falls below book value, recognized as a loss and relevant to judging asset quality and earnings sustainability.

A balance sheet item arising from temporary differences between accounting profit and taxable profit, settled in future periods and affecting the quality of reported earnings.

A situation where personal, financial, or other interests could improperly influence professional judgment, requiring disclosure, recusal, or other mitigation under governance policy.

A transaction between the bank and a director, shareholder, or connected entity, subject to approval limits, disclosure, and arm's-length pricing rules to prevent preferential treatment.

A supervisory assessment of the honesty, competence, and financial soundness of directors and senior managers before appointment and on an ongoing basis.