Commercial Banking & Finance – Semester 2, 2014
This individual assessment (Assessment Task 2) is designed to test your achievements in the BFF2401 unit learning objectives 1, 2, 3, 5 and 7. It requires you to answer the following questions:
1. What is bank loan portfolio credit risk? (2 marks)
2. What is the difference between a general reserve for credit losses and specific provision? (2 marks)
3. (i) Graph on two separate lines (1) loan loss reserve/gross loans, (2) impaired loans (NPLs)/gross loans from 2006 to 2013. Please include the 4 major Australian banks and 2 smaller banks from the following options (Suncorp-Metway Ltd, Bendigo and Adelaide Bank Ltd, Bank of Queensland Ltd) (4 marks)
(ii) Interpret these banks’ credit quality over 2006-2013 (8 marks)
3. (i) Outline the APRA regulations regarding to credit risk for the large major banks and contrast them to those for smaller banks (6 marks).
(ii) Comment on whether the four major or smaller banks benefit from the current regulatory setting regarding bank credit risk and why? (8 marks)
Word limit: 2,000 words – please note more than one or two sentence answers are expected
