- CFA Exams
- 2024 Level II
- Topic 3. Financial Statement Analysis
- Learning Module 14. Analysis of Financial Institutions
- Subject 3. Analyzing a Bank: Non-CAMELS Factors
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Subject 3. Analyzing a Bank: Non-CAMELS Factors PDF Download
The CAMELS approach does not address all considerations. These include banking- and non-banking-specific factors.
- Government ownership. It adds another layer of security for investors.
- Mission of banking entity. This affects how the bank manages its assets and liabilities.
- Corporate culture. Is the culture risk averse or risk seeking? Aggressive or conservative?
- Off-balance-sheet items. Is the VIE (variable interest entities) consolidated with the bank? What is the impact of interest rate volatility have on benefit plans? What is the size of assets under management (AUM)?
- Segment information.
- Currency exposure.
- Risk factors and disclosures.
Banking-specific analytical factors:
- Government support. Is a bank too big to fail? Can a country's banking system handle a bank's failure?
- Government ownership. It adds another layer of security for investors.
- Mission of banking entity. This affects how the bank manages its assets and liabilities.
- Corporate culture. Is the culture risk averse or risk seeking? Aggressive or conservative?
Non-banking-specific analytical factors:
- Competitive environment. How many competitors does a bank have? This may affect how the bank assesses risks and allocates its assets and liabilities.
- Off-balance-sheet items. Is the VIE (variable interest entities) consolidated with the bank? What is the impact of interest rate volatility have on benefit plans? What is the size of assets under management (AUM)?
- Segment information.
- Currency exposure.
- Risk factors and disclosures.
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