ࡱ> R%( F/ 0|DArial MT CondenttP4 0DTahomaMT CondenttP4 0" DTimes New RomanttP4 00DWingdingsRomanttP4 0@DTw Cen MT Condensed Extra Bold" A .  @n?" dd@  @@`` PH9X//HGHG014 0AA`ff3@83ʚ;ʚ;g4KdKd`n 0ppp@ <4dddd@w 0t,4 80___PPT10 ? %O  =;Managing Your Non-Performing Loan Portfolio Presented by: <<(Faye Ellece Jacobs Of Caribbean Integrated Financial Services Limited The Towers 25 Dominica Drive Kingston 5 Website:wwwcaribifs.com email:cifs@cwjamaica.com .P #Background to the Jamaican Meltdown$$(High Interest Rate/ unpredictable monetary policies and market conditions Unethical Practices Poor underwriting standards Mismatch of Assets/ Liabilities Poor Monitoring of the portfolio Under-representation of the contaminated portfolio Lending policies that increase NPL Failure to recognized NPL s Delay in recognizing the extent of the contamination Ever-greening of loans resulting in unreal profits Limitation of the Central Bank to effectively regulate Banks Varying standards by regulatory bodies for Commercial banks and other Financial institutions leading to the creation of various entities within  a group providing the opportunity for interwoven and incestuous affairs amongst the entities operating within the group. <P JWhen are the Creation of NPL s Likely&&3*Where the portfolio is being grown at a rapid rate Changes in the lending culture e.g. Where the lending culture changed from centralized to decentralized Other macroeconomic policies that are impacting the loan portfolio Where internal policies and procedures are allowed to weaken Loose underwriting standards Growth in interconnected borrowings Where lending opportunities are contracting Where the financial sector is expanding beyond the capacity of the central bank to effectively regulate and monitor. Poor performance by the business sector +P+Some Characteristic of a Financial Institution that is likely to create excessive NPL S "[W$3( NPL S are generally characteristic of those institutions that are: Influenced by external forces which leads to the creation of loans which are risky and marginal from the outset Underwriting standards are weak Internal monitoring system is inadequate Pursuit of profitability at the expense of prudence High decentralization of the lending decision Mismatch of assets and liabilities Domestic decision making process Unmanaged sectoral exposure:DZ}ZD}Warnings Signs38Abnormal growth of the loan portfolio Higher migration rates to the NPL portfolio Liquidity Problems Growing discontent amongst customers Above average / below average returns from lending operations. Above average requests for excesses/ need for constant restructuring of facilities Market Rumors Market Panic9P9 9Preliminary Steps to Address The Non-Performing Portfolio::(3Arrest the contagion Freeze lending Examine Lending Policies to counteract weak underwriting standards Establish the true level of NPL Create rehabilitation unit for marginal accounts with well-defined work-out strategies Move from decentralization to centralization of the lending decision Act decisively to address NPL Portfolio Remove decision  making process for NPL s from Lenders.P Recommendations to Manage NPL3Autonomy Creation of a separate Unit Skilled work out strategists Reporting Bases Separation of the unit from the influence of the owners of such credits Compensation Exit Strategies Z  Stratification of Loan Portfolio!!3By assets held as security By Value By Activity By Accounts capable of restructuring Devise strategic plan for large corporate accounts Design exit strategies by categoriesValuation of PortfolioAscertain the NPV of the portfolio Value underlying security on  distress sale basis to determine real values Discount for holding time Discount or apply nil value for items caught under  floating charges Discount for specialized real estate and commercial properties Manage the sale of assets given current and future market conditions UPU The Way Forward3&Preservation of your customers Create new opportunities for businesses that have a ready domestic market Avoid the  Herd Effect Practice Early Rehabilitation Ease the penalties Limit credit card facilities Limit exposure to overseas residents Tighten underwriting standardsP/pP/  0` r77f3/Ʊ` fff` KfxP` 7_/U<ff` HghXs3q̙` WXcklugti~^ӤO` ־3f3f` 33^` J%xiff3>?" dd@,?nFd@  d nF@ d`nF n?" dd@   @@``PP   @ ` ` p>> (  6 T ~  "~  c B@CW DEF"d@ W @W @W W @`".~  c B,CW DEF"d@ W ,W ,@`". \ ~  "~  c B CDEF"@   @`"(4  c B C DEF"d@ @`"(W4  c BtC DEF"d@t t tt@`"~   c B CDEF"@ @`"([4W   c B CDEF"d@ @`"(4   c B CDEF"2@  @`"(4[   c BC DEF"d@ @`"_   c BC DEF"@ @`"  c BC DEF"@  @`"\  B0 ?"0F<$  0  T Click to edit Master title style! !P  0П "0<$  0  RClick to edit Master text styles Second level Third level Fourth level Fifth level!     S  0P "`P  \*   0 "`p   ^*   0䰍 "`0  ^* H  0޽h ? fff___PPT10l. @F$+D' = @B D' = @BA?%,( < +O%,( < +D' =%(%(D' =%(D' =ABBB@B0B%(D' =1:Bvisible*o3>+B#style.visibility<*%(D' =+4 8?RCBBCB#ppt_wB*Y3>B ppt_w<*D' =+4 8?RCBBCB#ppt_hB*Y3>B ppt_h<*D;' =%(D' =%(D' =ABBB@B0B%(D' =1:Bvisible*o3>+B#style.visibility<*!%(D' =+4 8?RCBBCB#ppt_wB*Y3>B ppt_w<*!D' =+4 8?RCBBCB#ppt_hB*Y3>B ppt_h<*!D' =ABBB@B0B%(D' =1:Bvisible*o3>+B#style.visibility<*!.%(D' =+4 8?RCBBCB#ppt_wB*Y3>B ppt_w<*!.D' =+4 8?RCBBCB#ppt_hB*Y3>B ppt_h<*!.D' =ABBB@B0B%(D' =1:Bvisible*o3>+B#style.visibility<*.:%(D' =+4 8?RCBBCB#ppt_wB*Y3>B ppt_w<*.:D' =+4 8?RCBBCB#ppt_hB*Y3>B ppt_h<*.:D' =ABBB@B0B%(D' =1:Bvisible*o3>+B#style.visibility<*:G%(D' =+4 8?RCBBCB#ppt_wB*Y3>B ppt_w<*:GD' =+4 8?RCBBCB#ppt_hB*Y3>B ppt_h<*:GD' =ABBB@B0B%(D' =1:Bvisible*o3>+B#style.visibility<*GS%(D' =+4 8?RCBBCB#ppt_wB*Y3>B ppt_w<*GSD' =+4 8?RCBBCB#ppt_hB*Y3>B ppt_h<*GS+p+0+0 ++0+0 + Shimmer_  0 OG(   T ~  "~~b ~ # "~  c B@CW DEF"d@ W @W @W W @`".~  c B,CW DEF"d@ W ,W ,@`".  c B CDEF"2@  @`"(4[  c BC DEF"@ @`"  c BC DEF"d@ @`"_b \~  # "\~   c B CDEF"@   @`"(4   c B C DEF"d@ @`"(W4   c BtC DEF"d@t t tt@`"~   c B CDEF"@ @`"([4W  c B CDEF"d@ @`"(4  c BC DEF"@  @`"\  H`q ?"p<$  0  T Click to edit Master title style! !   0tcq " ` <$  0 q W#Click to edit Master subtitle style$ $  0@hq "`P q \*   0`lq "`@`  q ^*   0pq "`0 q ^* H  0޽h ? fff  ___PPT10 . @F$+mD ' vq= @B D ' = @BA?%,( < +O%,( < +D' =%(%(D' =%(D' =ABBB@B0B%(D' =1:Bvisible*o3>+B#style.visibility<*%(D' =+4 8?RCBBCB#ppt_wB*Y3>B ppt_w<*D' =+4 8?RCBBCB#ppt_hB*Y3>B ppt_h<*D_' =%(D' =%(D' =ABBB@B0B%(D' =1:Bvisible*o3>+B#style.visibility<*$%(D' =+4 8?RCBBCB#ppt_wB*Y3>B ppt_w<*$D' =+4 8?RCBBCB#ppt_hB*Y3>B ppt_h<*$+p+0+0 ++0+0 + 0 0L*(  L L 0 P    X*  L 0      Z* d L c $ ?   L 0`  0  RClick to edit Master text styles Second level Third level Fourth level Fifth level!     S L 6̬ _P   X*  L 6ԉ _   Z* H L 0޽h ? 3380___PPT10.B h^ 0L0  0(  x  c $0qp q x  c $؂qp`p` q H  0޽h ? 33___PPT10i.B ٫+D=' = @B +  0L0 l<(  l~ l s *q0F  q ~ l s *Tq0 q H l 0޽h ? kuos___PPT10i.B+D=' = @B +  0L0 `0(  `x ` c $q0F  q x ` c $q0 q H ` 0޽h ? kuos___PPT10i.B@+D=' = @B +  0L0 80(  8x 8 c $tq0F  q x 8 c $q0 q H 8 0޽h ? kuos___PPT10i.B+D=' = @B +  0L0 D0(  Dx D c $ 0F   x D c $x 0  H D 0޽h ? kuos___PPT10i.B e6+D=' = @B +  0L0 PT0(  Tx T c $ 0F   x T c $0  H T 0޽h ? kuos___PPT10i.Bpl+D=' = @B +  0L0 @0(  @x @ c $'0F   x @ c $(`  H @ 0޽h ? kuos___PPT10i.Bp[+D=' = @B +  0 L0 `X0(  Xx X c $ :0F   x X c $:0  H X 0޽h ? kuos___PPT10i.B$6S+D=' = @B +  0L0 p\0(  \x \ c $A0F   x \ c $A0  H \ 0޽h ? kuos___PPT10i.BF+D=' = @B +$  0 @$(  r  S (!q0F  q r  S x q0 q H  0޽h ? fff80___PPT10.|Ig+ 0 h(  hX h C L    h S L 0   ~Control the migration of loans to the NPL category Consider reducing interest costs  structure excess overdrafts on loan to prevent charging excess interest rates Waive late payment fees and penal fees. Give your customers tips on cash-flow management and the importance of liquidity in this tight market which will become tighter. Prepare your customers for the harsh market that they will face-devise survival tips and strategies for customers. At all costs do not push your customers beyond ability to pay-it is better to preserve your investment than to create bad debts!H h 0޽h ? 3380___PPT10.NCO 0 p_(  pX p C L    p S \͐L 0   aMReference to the Indigenous banking sector in Jamaica vs. International BanksH p 0޽h ? 3380___PPT10.rD`  0 $(  X  C L     S ֐L 0   &High reserves -25 % on which no interest was paid. Un predictability in monetary policies  liberalization of market and its impact , use of interest rate and devaluation as part of monetary policy which in itself led to and created unpredictable market conditions. H  0޽h ? 3380___PPT10.G"2  0 {s (  X  C L   s  S ,L 0   Poor Performance by the business sector leads to protracted repayment of facilities and often times result in the bank increasing facilities to the business in the hope that turnaround will take place to allow it to recover and perhaps too to put off the recognition of the loan as a non-performing one. Exposure to interconnected parties which is not managed. The contraction of lending opportunities will force the bank to take on weaker prospects in a bid to reach targets and meet profitability. Rapid turnover of staff and senior management generally lead to diluted underwriting standards, poor approval standards, and weak reporting are causes. Refer to the Jamaica situation where commercial banks grew fromxx to xx and merchant banks from xx to xx. H  0޽h ? 3380___PPT10.G..rd xԀ0}ψr @&x!+~0v{~ ՛0Z%DUʐ1Oh+'0,V hp    ,8@<Managing Your NON-Performing Loan Portfolio Presented by:  Faye JacobsShimmer 42Microsoft Office PowerPoint@yc@t>B@cI/GTg  j*N  yf--$xx--'-f--$ww--h--$w"w"--j--$""w)w)"--l--$))w0w0)--n--$00w4w40--p--$44w9w94--r--$99w=w=9--t--$==wAwA=--v--$AAwDwDA--x--$DDwHwHD--z--$HHwKwKH--|--$KKwOwOK--~--$OOwRwRO----$RRwVwVR----$VVwYwYV----$YYw]w]Y----$]]w`w`]----$``wdwd`----$ddwhwhd----$hhwmwmh----$mmwqwqm----$qqwvwvq----$vvw|w|v----$||ww|----$ww----$ww---'-f--$""--g--$"&&""--h--$&))&&--i--$)++))--j--$+..++--k--$.00..--l--$02200--m--$24422--n--$45544--o--$56655--p--$68866--q--$89988--r--$9::99--s--$:<<::--t--$<==<<--u--$=>>==--v--$>??>>--w--$?@@??--x--$@AA@@--y--$ABBAA--z--$BCCBB--{--$CDDCC--|--$DEEDD--}--$EFFEE--~--$FGGFF----$GHHGG----$HJJHH----$JKKJJ----$KLLKK----$LMMLL----$MNNMM----$NOONN----$OPPOO----$PQQPP----$QRRQQ----$RSSRR----$SUUSS----$UVVUU----$VWWVV----$WYYWW----$YZZYY----$Z[[ZZ----$[]][[----$]^^]]----$^aa^^----$abbaa----$beebb----$ehhee----$hjjhh----$joojj----$ottoo----$twwtt---'-$m--$--2p--$--p--$----$----$----$----$  ----$ !!  ----$!""!!----$"##""----$#$$##--T~--$$%%$$---'-e--$  --d--$  --_--$  --V--$  --G--$  --4--$  --"--$  ---'---$  --$--$  --1--$  --@--$  --K--$  --V--$  --]--$  --b--$  --e--$ --f--$   ---'-g--$--h--$--j--$--m--$--o--$--s--$--w--$--{--$----$  ----$     ----$     ----$     ----$     ----$   ----$----$----$----$----$---'---$,00,,----$04400----$48844----$8::88----$:<<::----$<??<<----$?@@??----$@BB@@----$BCCBB----$CEECC----$EFFEE----$FGGFF----$GHHGG----$HIIHH----$IJJII----$JLLJJ----$LMMLL----$MNNMM----$NOONN----$OPPOO----$PQQPP----$QRRQQ----$RSSRR----$STTSS----$TUUTT----$UVVUU--}--$VWWVV--|--$WXXWW--{--$XYYXX--z--$YZZYY--y--$Z[[ZZ--x--$[\\[[--w--$\]]\\--u--$]^^]]--t--$^``^^--s--$`aa``--r--$abbaa--q--$bccbb--p--$cddcc--o--$deedd--n--$eggee--m--$ghhgg--l--$hjjhh--k--$jkkjj--j--$knnkk--i--$nppnn--h--$prrpp--g--$rvvrr--f--$vwwvv---'---$ ) )----$)) 3 3)----$33 < <3----$<< B B<----$BB F FB----$FF J JF----$JJ N NJ----$NN R RN----$RR V VR----$VV X XV----$XX \ \X----$\\ _ _\----$__ c c_----$cc e ec--}--$ee i ie--{--$ii l li--y--$ll o ol--w--$oo r ro--u--$rr u ur--s--$uu y yu--q--$yy ~ ~y--o--$~~ ~--m--$ --k--$ --i--$ --f--$ ---'-f--$%&&%%--d--$&''&&--]--$'((''--S--$())((--C--$)**))--0--$*++**----$+,,++---'---$----$--'--$--:--$--K--$--Y--$--a--$---'-l--$   --b--$   ----$   ----$   ----$    ----$  ----$  ----$  ----$  ----$  --`--$  --k--$  ---'@"Tahoma-. !2 Managing Your Noni.. f!2 Managing Your Noni."System -@"Tahoma-.  2 n-.. f 2 m-.-@"Tahoma-. -2 Performing Loan Portfolio .. f-2 Performing Loan Portfolio .-@"Tahoma-. 2 0 Presented by:.. f2 / Presented by:.-@"Tw Cen MT Condensed Extra Bold-. f"2 @Faye Ellece Jacobs.-@"Tw Cen MT Condensed Extra Bold-. f 2 EOf.-@"Tw Cen MT Condensed Extra Bold-. fN2 K/Caribbean Integrated Financial Services Limited.-@"Tw Cen MT Condensed Extra Bold-. f2 P The Towers.-@"Tw Cen MT Condensed Extra Bold-. f"2 U25 Dominica Drive .-@"Tw Cen MT Condensed Extra Bold-. f2 [ Kingston 5.-@"Tw Cen MT Condensed Extra Bold-. f*2 eWebsite:wwwcaribifs.com.-@"Tw Cen MT Condensed Extra Bold-. f+2 eZemail:cifs@cwjamaica.com.-՜.+,0    2On-screen Showi  ArialTahomaTimes New Roman WingdingsTw Cen MT Condensed Extra BoldShimmer<Managing Your Non-Performing Loan Portfolio Presented by: $Background to the Jamaican Meltdown&When are the Creation of NPLs Likely[Some Characteristic of a Financial Institution that is likely to create excessive NPLS Warnings Signs:Preliminary Steps to Address The Non-Performing PortfolioRecommendations to Manage NPL!Stratification of Loan PortfolioValuation of PortfolioThe Way Forward  Fonts UsedDesign Template Slide Titles _`0    !"#$%&'()*+,-./0123456789:;<=>?@ABCDEFGHIJKLMNOPQRTUVWXYZ[\]^_`abcdefghijklmnopqrstuvwxyz{|}~Root EntrydO)Current UserSummaryInformation(S\VPowerPoint Document(DocumentSummaryInformation8