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Banks Financial Statement Analysis - Advanced

Learn how to build an advanced structured approach for the analysis of a bank's financial statements

A stunning view of a city from above with a sense of scale and perspective

A one-day advanced banks financial statement analysis training

Session 1: Introduction to Financial Statement Analysis for Banks

  • Balance sheet
  • Bank Income statement
  • Cash flow statement
  • Statement of change in shareholders' equity/comprehensive income

Case Study: participants will review Barclays’ bank financial statements

Session 2: The Banking Book

  • Types of banking book:
    • Mortgages
    • Credit cards
    • Personal loans
    • SME (small-to-medium enterprise) loans
    • Corporate loans
    • Syndicated loans
  • On a balance sheet or securitised
  • Amortised cost methodology
  • Credit Issues and collateral
  • Non-performing loans

Session 3: Loan Loss Impairment

  • Incurred losses (IAS 39) have been replaced by expected losses (IFRS 9)
  • Three-stage process to determine loan loss impairments:
    • Stage 1: “12-month expected credit losses” with an effective interest rate on the gross carrying amount
    • Stage 2: “lifetime expected credit losses” with an effective interest rate on the gross carrying amount
    • Stage 3: “lifetime expected credit losses” with effective interest rate on gross on amortised costs

Case Study: participants will assess the credit deterioration of a loan

Session 4: Financial Instruments

  • Amortised Costs
  • Fair value through Profit & Loss (FVTPL)
  • Fair value through Other Comprehensive Income (FVTOCI)
  • Accounting treatment is determined by (i) the business model (ii) the nature of cash flows
  • Decision tree to decide on the classification of bank financial instruments

Case Study: participants will be presented with a few classifications of financial instruments and will classify them into their relevant categories

  • Balance sheet and P&L (Profit and Loss) calculation of a bond at amortized cost:
    • Based on the Internal Rate of Return (IRR) of future cash flows
    • Treatment of fees in the IRR calculation
  • Balance sheet and P&L calculation of a bond at FVTPL and FVTOCI:
    • Effective interest rate method for interests (same as amortised costs)
    • Unrealised gain based on NPV (net present value) at a current yield of future cash flows
  • Fair value assessment:
    • Level 1 based on unadjusted quoted price
    • Level 2 based on quoted price in inactive markets or observable model input
    • Level 3 based on unobservable but significant inputs to the overall value

Case Study: participants will compute in Excel the impact on the balance sheet and P&L of a bond under amortised costs and FVTPL

Session 5: Bank Derivatives

  • Trading and hedging
  • Hedge accounting: fair value, cash flow and net investment
  • Netting derivative assets and liabilities
  • Qualification for hedge accounting:
    • Cash flow hedge
    • Fair value hedge
    • Net investment hedge for foreign subsidiaries

Case Study: participants will classify a few hedging transactions in their relevant categories

Case Study: participants will value an interest rate swap accounted for as a cash flow hedge

  • IFRS 9 hedge accounting more closely aligned with bank risk management policy:
    • Removal of hedge effectiveness criteria (80% to 125%)
    • Extends eligibility of risk component to include non-financial items
    • Permits aggregate exposure that includes a derivative to be an eligible hedged item
    • Group of items and a net position (e.g. assets & liabilities or forecast sales & purchases) hedged collectively as a group
  • Accounting treatment for the time value of money for options: a two-step process through OCI (Other Comprehensive Income)
  • Accounting treatment for foreign currency forward points in OCI

Case Study: participants will review and assess different hedge scenarios including risk component hedging, aggregate exposures and net position

Session 6: Financing: Debt and Equity

  • Financial liabilities at amortised cost or FVTPL:
    • Own credit deterioration reduces institutions’ liabilities
    • Liability reduction due to rating downgrade to be now classified in OCI
  • IFRS shareholders’ equity and treasury shares
  • Common Equity Tier 1 (CET1), Tier 1, Tier 2 and Total capital:
    • Key reconciliation items from IFRS Book Equity to CET1: minority interests, deferred tax, changes to an investment portfolio, etc.
  • Overview of calculating risk-weighted assets (RWAs): credit risk RWA, counterparty risk, market risk and operating risk

Case study: Review Barclays’ Shareholders Equity to Tier I reconciliation

This advanced financial statement analysis training is delivered by an expert who has more than 20 years of experience in accounting and investment banking. He is an experienced financial trainer who has delivered courses for leading financial institutions and central banks in the City of London, Wall Street and around the world in the areas of Corporate Finance Analysis, Valuation (Industrials and Banks), Advanced Financial Modelling, M&A (Mergers and Acquisitions), LBO (Leveraged Buyout), Financial Accounting, Capital Markets, Bank Regulatory Capital and Financial Risks, both in English and French.

He began his career as a Credit Analyst at Banque Continentale in Luxembourg, where he conducted credit analyses for short and long-term credits and participated in loan syndications. He then worked as a Senior Auditor for Deloitte & Touche in Luxembourg companies, auditing and preparing financial statements for a variety of banks, insurance, investment funds, venture capital and commercial companies.

He continued his career in Investment Banking at Citigroup (ex-Salomon Smith Barney) in London and New York where he worked on a variety of M&A, LBO and debt offerings, mainly for financial services clients. He was involved in the EUR 20 billion public offer of Crédit Lyonnais by Crédit Agricole, one of the largest European banking transactions.

He then worked as a Vice-President in the internal M&A department of Barclays Bank in London where his experience included the acquisition of ABSA for US$ 5 billion, one of the leading South African banks, the purchase of ING Private Banking in France and the failed acquisition of Banco Atlantico in Spain.

Recently, he was a Director in the Investment Banking department of Commercial International Bank (CIB), the largest non-government bank in Egypt, where he has completed several transactions, including two sell-side M&A deals, one follow-on equity offering and a delisting. He worked extensively with leading sovereign wealth funds, private equity firms and prominent families in the UAE, Qatar, Kuwait and Saudi Arabia.

He is currently a senior advisor to an M&A practice based in Paris and focuses on buy-side and sell-side transactions, mainly in the technology sector.

This trainer has an MBA in Finance from the Kellogg School of Management in Chicago and a Bachelor of Science in Finance from Groupe INSEEC (“International Management Institute of Paris”). He also holds « Series 7 » and « Series 63 » US licences.

Advanced banks financial statements analysis training allows participants to build a structured approach to analysing the bank’s financial statements. Specifically, through a mix of lectures case studies and Excel modelling, the workshop will equip participants to:
  • Review the accounting and valuation of the bank's financial statements.
  • Understand the banking book and the new IFRS 9 treatment for loan loss impairment using financial statement analysis of the expected loss methodology.
  • Analyse the accounting treatment of bank financial instruments including amortised costs, FVTPL (Fair Value through Profit & Loss) and FVTOCI (Fair Value through Other Comprehensive Income).
  • Review trading and hedging of bank derivatives under the new IFRS 9 rules.
  • Analysis of bank financial statement liabilities at amortised cost and FVTPL including fair value for own credit.
  • Understand IFRS (International Financial Reporting Standards) shareholders’ equity and the reconciliation to CET 1 (Common Equity Tier I), Tier I and Total Capital.

  • Redcliffe Training’s banking financial statement analysis online course is led by an experienced trainer: an ex-FIG M&A banker with years of experience in bank analysis and valuation.
  • Comprehensive material covering all advanced aspects of the bank's financial statement analysis, including the latest IFRS 9 analysis.
  • Step-by-step, easy-to-follow Excel models illustrating key concepts.
  • Delegates are encouraged to bring their own bank's financial statement analysis challenges to ‘solve’ during the session.

Our advanced banks financial statement analysis course is a practical workshop by an experienced FIG (Financial Institutions Group) trainer, which will give you an in-depth understanding of advanced topics for the financial statements of banks, including expected loss methodology under IFRS 9, level 1 to 3 fair value, hedge accounting and bank income statements.

  • The instructor was flexible by allowing extra time to focus on the areas that were of most interest to me.

Have this course presented In-House

  • On a date, time and in a location of your choice
  • Topics expanded or deleted to your bespoke requirements

Have this course pre-recorded

  • Full course recording edited exclusively for your company
  • Files converted to enable housing on your LMS
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