Camel Model
CAMELS RATINGS
USAID-Funded Economic Governance II Project
Presented To: CBI Bank Supervision Examiners Date:2006-10-29
1
Authors
This document was prepared by: Patrick Y. Trautmann BearingPoint
This document is protected under the copyright laws of the United States and other countries: it has been prepared by BearingPoint, Inc. (“BearingPoint”) Technical Advisors and/or contractors working directly for BearingPoint under the auspices of the U.S. Agency for International Development (“USAID”) contract number 267-C-00-04-00405-00. This document and all accompanying pages are strictly for the use of USAID in support of their own consideration regarding the subject matter contained herein. Except where explicitly stated otherwise, the following information was prepared on the basis of data that is publicly available or was provided by USAID: it has not been independently verified or otherwise examined to determine its accuracy, completeness or financial feas bility (where applicable). Neither BearingPoint, USAID nor any person acting on behalf of either assumes any liabilities, expenses (including attorney’s fees and legal expenses) fines, penalties, taxes or damages (collectively “liabilities”), resulting from the use of any information contained in this document.
© 2005 BearingPoint, Inc. All rights reserved.
2
Overview
Learning objectives
Review the key components of CAMELS ratings. Understand their meaning and their application to commercial banks. There are six elements:
— — — — — —
Capital adequacy Asset quality Management Earnings Liquidity Sensitivity to market
?
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Purpose of CAMELS ratings
The purpose of CAMELS ratings is to determine a bank’s overall condition and to identify its strengths and weaknesses:
Financial Operational Managerial
4
Rating System
Each bank is assigned a uniform composite rating based on six elements. The system provides a general framework for evaluating the banks. It is a
USAID-Funded Economic Governance II Project
Presented To: CBI Bank Supervision Examiners Date:2006-10-29
1
Authors
This document was prepared by: Patrick Y. Trautmann BearingPoint
This document is protected under the copyright laws of the United States and other countries: it has been prepared by BearingPoint, Inc. (“BearingPoint”) Technical Advisors and/or contractors working directly for BearingPoint under the auspices of the U.S. Agency for International Development (“USAID”) contract number 267-C-00-04-00405-00. This document and all accompanying pages are strictly for the use of USAID in support of their own consideration regarding the subject matter contained herein. Except where explicitly stated otherwise, the following information was prepared on the basis of data that is publicly available or was provided by USAID: it has not been independently verified or otherwise examined to determine its accuracy, completeness or financial feas bility (where applicable). Neither BearingPoint, USAID nor any person acting on behalf of either assumes any liabilities, expenses (including attorney’s fees and legal expenses) fines, penalties, taxes or damages (collectively “liabilities”), resulting from the use of any information contained in this document.
© 2005 BearingPoint, Inc. All rights reserved.
2
Overview
Learning objectives
Review the key components of CAMELS ratings. Understand their meaning and their application to commercial banks. There are six elements:
— — — — — —
Capital adequacy Asset quality Management Earnings Liquidity Sensitivity to market
?
3
Purpose of CAMELS ratings
The purpose of CAMELS ratings is to determine a bank’s overall condition and to identify its strengths and weaknesses:
Financial Operational Managerial
4
Rating System
Each bank is assigned a uniform composite rating based on six elements. The system provides a general framework for evaluating the banks. It is a