summary of moody's jda for banks - Bad Request

Global Credit Research
Financial Institutions
May 29, 2007
Five factors for BFSR
determination
Sector Report - Summary of Moody's JDA For Banks
The BFSR includes five factors, which have different weights: franchise value
(20%), risk positioning (20%), regulatory environment (5%), operating
environment (5%), and financial fundamentals (50%). Within each of these
categories, there are sub-factors (see scorecard below).
MOODY'S BFSR SCORECARD WEIGHTS FOR BANKS IN MATURE MARKETS
Qualitative
Factors
50%
Financial
Factors
50%
Franchise
Value
Risk
Positioning
Regulatory
Environment
Category
Weight
Bayerische Hypo- und Vereinsbank AG, CA IB International Markets AG, Bayerische Hypo- und Vereinsbank AG Milan Branch See last pages for disclaimer.
4
Overall
Weight
40% 20% − Market share and sustainability
− Geographical diversification
− Earnings stability
− Earnings diversification
40% 20% − Corporate Governance
− Controls & Risk Management
− Financial Reporting Transparency
− Credit Risk Concentration
− Liquidity Management
− Market Risk Appetite
Sub-
Factor
Weight
25%
25%
25%
25%
16.7%
16.7%
16.7%
16.7%
16.7%
16.7%
Overall
Weight
5.0%
5.0%
5.0%
5.0%
3.3%
3.3%
3.3%
3.3%
3.3%
3.3%
10% 5% − Regulatory Environment 100% 5.0%
Operating
10% 5% − Economic Stability
33.3% 1.7%
Environment
− Integrity and Corruption
33.3% 1.7%
− Legal System
33.3% 1.7%
Profitability 15.75% 8% − PPP % Avg RWA
50% 3.9%
− Net Income % Avg RWA
50% 3.9%
Liquidity 15.75% 8% − (Market funds – Liquid Assets)
36% 2.8%
% Total Assts
64% 5.1%
− Liquidity Management
Capital
15.75% 8% − Tier 1 ratio (%)
50% 3.9%
Adequacy
− Tangible Common Equity % RWA 50% 3.9%
Efficiency 7 % 4% − Cost/income ratio 100% 3.5%
Asset Quality 15.75% 8% − Problem Loans % Gross Loans
− Problem Loans % (Equity + LLR)
Lowest Score 30 % 15% − Assigned to lowest combined
financial factor score
Source: Moody's; Global Research (HVB)
50%
50%
3.9%
3.9%
100% 15.0%