Case Study On The Risk Management Before Loan Of Project Loans In Comerical Banks

Credit risk management is the core business of commercial banks. At present, the proportions of non-performing loan are generally high among domestic banks and credit risk became the main financial risk which the commercial banks are facing. Whether a bank could exist in keen competition depends on its ability to manage credit risk, which is the reason why commercial banks consider enhancing credit risk management as an urgent task.In recent years, the project loans have developed rapidly in China and have become the most important areas of new bank loans. The terms of project loans are generally long and the structures of project loans are generally complex. Being the lenders in project loan, commercial banks sustain great risk. Based on the considerations above, this paper analyzes the existent problem of risk control before loaning through a case of a certain bank’s three hydroelectric projects. As for the results, the article analyzes the causes and presents relevant suggestions in the end.Firstly, the article reviews the types and causes of commercial bank credit risk, especially the characteristics and are risk of project loan, which draws out the theory of project loan risk management.The second part mainly studies the financial characteristics, credit opportunities, operational risks and relevant suggestions of hydropower industry in China as well as the credit risk of project finance banks.The third part researches three hydroelectric projects of a certain bank and points out the problems during the evaluation phase of project loan respectively, and then analyses the causes of the problems that occur and extracts methods of risk identification, risk warning and risk control.Finally, the article focuses on the significance, processes and methods of commercial banks’ credit risk management.