National Development Bank, The Credit Rating System And Case Analysis

China Development Bank's credit rating system is set up on the basis of consultation and suggestions of Boston Consulting Company, internal rating methods of European and American banks, and the situation of China and the bank itself.Based on the basic theory of credit rating, the author analyzed the credit status of Xintian International Trade Co. Ltd. and completed a credit rating report of the client. The analysis and report combined basic contents and fundamental principles of the credit rating system ofChina Development Bank. At the same time, the author discussed the deficiencies of thebank's credit rating system and gave some suggestions using case study.Case study of Xintian International demonstrates that the client's development trend andcapability of fulfilling a contract in the future should be estimated based on the analysis ofclient's current situation since the payback of a loan is in the future. There are some defectsin the reference index setting for credit rating of China's Development Bank.The author suggested that growth index of financial factors should include increment. Linkrelative growth rate should be taken account in growth rate. Thus the dynamic andcontinuous growth of the client could be analyzed and predicted in time and the rating resultswould be more accurate.The author suggested that standard value of non-financial factor index settings should bebased on file analysis and comprehensive estimation.The author believed that to set up and perfect fundamental database of internal rating, longterm and systematic research must be carried out on basic characteristics, development trendand main risk factor of different industries. Such a database will provide evaluation standardfor risk comparison in one industry and between different industries for the evaluated objectand help determine the credit class.