Bank Credit Analyst

A financial professional who evaluates the creditworthiness of securities, individuals, or businesses.

Author: Matthew Retzloff
Matthew Retzloff
Matthew Retzloff
Investment Banking | Corporate Development

Matthew started his finance career working as an investment banking analyst for Falcon Capital Partners, a healthcare IT boutique, before moving on to work for Raymond James Financial, Inc in their specialty finance coverage group in Atlanta. Matthew then started in a role in corporate development at Babcock & Wilcox before moving to a corporate development associate role with Caesars Entertainment Corporation where he currently is. Matthew provides support to Caesars' M&A processes including evaluating inbound teasers/CIMs to identify possible acquisition targets, due diligence, constructing financial models, corporate valuation, and interacting with potential acquisition targets.

Matthew has a Bachelor of Science in Accounting and Business Administration and a Bachelor of Arts in German from University of North Carolina.

Reviewed By: Elliot Meade
Elliot Meade
Elliot Meade
Private Equity | Investment Banking

Elliot currently works as a Private Equity Associate at Greenridge Investment Partners, a middle market fund based in Austin, TX. He was previously an Analyst in Piper Jaffray's Leveraged Finance group, working across all industry verticals on LBOs, acquisition financings, refinancings, and recapitalizations. Prior to Piper Jaffray, he spent 2 years at Citi in the Leveraged Finance Credit Portfolio group focused on origination and ongoing credit monitoring of outstanding loans and was also a member of the Columbia recruiting committee for the Investment Banking Division for incoming summer and full-time analysts.

Elliot has a Bachelor of Arts in Business Management from Columbia University.

Last Updated:April 26, 2024

What is a Bank Credit Analyst?

A bank credit analyst is a professional who evaluates the creditworthiness of individuals, companies, or investment opportunities. The primary goal is determining the risk of lending or investing money.

Credit analysts at banks play an important role in the economy. For example, when providing lines of credit to those who apply for individual or business loans, they offer advice or recommendations to banks and insurers.

Individuals in bank credit analyst positions are knowledgeable about financial statements and concepts, can work effectively in a high-pressure environment, and have strong attention to detail.

Credit analysts must have a background in finance, economics, mathematics, accounting, or a related field. Candidates with bachelor's degrees and experience are preferred, though if someone has a graduate degree, a potential employer may overlook experience. 

Some analysts have additional advanced certification, such as training provided by the National Association of Credit Analysts

Key Takeaways

  • A bank credit analyst evaluates the creditworthiness of individuals and businesses to determine the risk of lending or investing money.
  • Prospective bank credit analysts typically hold a bachelor's degree in finance, accounting, or a related field. Experience is a significant asset, and advanced certifications, such as those from the National Association of Credit Analysts, can further bolster credentials.
  • Key duties of a bank credit analyst include examining financial statements, producing risk reports, suggesting payment plans, creating financial ratios, and verifying financial transactions.
  • Credit analysts may issue both individual credit scores (like FICO scores) and letter grades for debt issuers, such as AAA or BBB for bonds. Debt below a certain rating is considered "junk" or below investment grade. Rating agencies like Moody's and Standard & Poor's employ bond credit analysts.

Job Responsibilities of a Bank Credit Analyst

A bank credit analyst's role varies depending on the employer, but in general, the job entails the following responsibilities:

  • Examine a client's credit history and financial statements to determine credit risk
  • Produce credit risk reports
  • Client records are evaluated, and payment plans are recommended
  • Create financial ratios for clients to assess their financial situation
  • Consolidate credit files and look for differences and discrepancies
  • Work with clients to verify financial statements or transactions
  • Keep up with the most recent lending protocols.

A credit analyst collects and analyzes financial information related to lending and credit products. This includes examining borrowers' payment history, liabilities, earnings, and assets. 

The analyst searches for indicators that the borrower may be risky. The information is used to recommend credit approval or denial and determine whether to increase or decrease credit limits or charge additional fees.

Their jobs require them to interpret financial statements and use ratios to assess a potential borrower's fiduciary behavior and history. In addition, they determine whether the borrower's cash flows are adequate by comparing ratios to industry data benchmarks.

For example, a credit analyst at a bank may review an agricultural company's financial statements before approving a loan for new farm equipment. 

Employment is available at various financial institutions, including banks, investment firms, credit unions, credit rating agencies, insurance firms, and asset management firms. Analysts who work in securities and commodity contracts are paid the most.

Educational Requirements Of A Bank Credit Analyst

A bachelor's degree in finance, accounting, or business is required for employment as a bank credit analyst in the finance industry. In addition, you should be familiar with related subjects such as ratio analysis, statistics, economics, risk assessment, calculus, and financial statement analysis.

After completing your bachelor's degree, you may want to gain a few years of quantitative solid work experience in accounting, accounts receivable, or credit application processing to prepare for a bank credit analyst position.

Consider taking certification courses designed for bank credit analysts after you have worked in the industry for a while. It is not a required step, but it will give you an advantage because many employers prefer those with certifications. 

Credit analyst certification courses are available from various educational institutes and organizations, whether online or in a classroom setting.

Common Employers And Career Options

Bank credit analysts typically work in commercial and investment banks, credit card companies, investment firms, and credit rating agencies. Wells Fargo & Co., Comerica Bank, Bank of America Corp.J.P. Morgan Chase & Co., and KeyBank are involved.

The breadth and depth of educational background and experience enable bank credit analysts to pursue various career paths in the finance industry. 

Bank credit analysts have career options that can open them to a wide range of different credit professions, including

  • Commercial credit analysis
  • Deposit and non-deposit intermediation
  • Real estate credit
  • Financial investments & securities
  • Corporate credit departments
  • Insurance-related activities, and
  • Credit and loan departments across industries.

Bank credit analysts' career trajectory can begin with junior roles and end with senior roles, which include managing teams and analytical departments, making decisive credit decisions, and monitoring departmental performance.

Credit Ratings and Credit Analysts

Credit analysts may issue credit scores as well. A credit score is a three-digit number that ranges between 200 and 850. The FICO score is the most common type of individual credit score.

Individual credit scores are typically generated through algorithmic processes based on credit payment histories, spending, and previous bankruptcies.

Letter grades assign ratings to debt issuers and their instruments, such as bonds. For example, AAA has the highest rating, followed by AA+, BBB, and so on. When a company's debt falls below a certain rating, it is considered junk or below investment grade.

These investments typically have higher yields to compensate for the increased credit risk. Bonds issued by sovereign governments can also have credit ratings. Bond credit analysts are frequently employed by credit rating agencies such as Moody's or Standard & Poor's (S&P).

Rating agencies such as AM Best rate insurance companies based on their credit risk and financial stability.

Abilities you need to be a Bank credit analyst

To be an effective bank credit analyst, you will need a unique blend of skills related to the banking sector. Here are some of the key abilities required:

  1. Knowledge of the industry: Understanding the main functions of banking, including various loan products, interest rates, and financial regulations, is necessary. A Bank Credit Analyst must comprehend how different banking services operate and impact credit decisions.
  2. Financial Knowledge: One needs to be proficient in analyzing financial statements, credit histories, and economic trends specific to banking contexts. Interpreting balance sheets, cash flow statements, and income statements of individual and corporate clients is essential for accurate credit assessment.
  3. Risk Assessment Skills: Assessing the risk associated with lending is a primary responsibility. Bank Credit Analysts must evaluate the probability of borrowers defaulting on loans and devise strategies to mitigate these risks effectively.
  4. Regulatory Compliance: Staying up-to-date with banking regulations, both local and international, is also necessary and important. Knowledge of compliance requirements ensures credit decisions align with legal and regulatory standards, safeguarding the bank's interests.
  5. Communication and Persuasion: Effective communication skills are vital. Bank Credit Analysts must clearly articulate complex financial data and risk assessments to financial experts and non-specialists within the bank. Persuasive abilities are essential when presenting credit proposals and justifying lending decisions to internal stakeholders.
  6. Industry-specific Insight: A deep understanding of the industries in which bank clients operate is necessary. Bank Credit Analysts need to identify industry-specific trends, challenges, and opportunities that can impact the creditworthiness of businesses within those sectors.
  7. Continued Education and Certification: Pursuing relevant certifications, such as the Chartered Financial Analyst (CFA), focusing on banking and finance, enhances expertise. Continuous learning keeps Bank Credit Analysts updated with industry best practices and emerging trends.

Bank Credit Analyst FAQs

Researched and authored by Javed Saifi | Linkedin

Reviewed and edited by Tanay Gehi | Linkedin

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