The important work of credit institutions in the financial system is to contact suppliers and demanders of financial resources. Numeravi offers advice to mitigate their risks and therefore better manage their resources, making their operation more efficient.

Credit institutions specialize in granting loans to support the economy’s efficient operation, the production and consumption of goods and services.

Commercial banks have the substantive function of financial intermediation, guaranteeing the service to savers and debtors.

The development banking is a fundamental economic policy tool since it has the function of granting resources to finance infrastructure projects and productive activities that promote the economic development of a country.

Leasing companies specialize in contracts in which an entity acquires certain assets and grant temporary use to a company or an individual, that pays fees that include the asset’s cost and the expenses related to its use. This makes leasing a good financing option for companies that need to acquire productive assets, but they do not want to use significant amounts of their own capital, which is very helpful for companies that need to grow, but they do not have large economic resources.

All credit institutions should have efficient risk management methodologies, procedures and systems which comply with national and international standards and at the same time, boost them to obtain the profitability they require for their growth and sustainability.

Numeravi contributes to achieve these objectives by providing consultancy and systems that allow effective identification and measurement of the different risks to which institutions are exposed. Furthermore, it proposes improvements in both operational processes and risk management policies, helping to consolidate the institutions’ financial indicators, without losing sight of the promotion of economic development which is their main goal.

Numeravi provides consultancy and automated systems for credit, market, liquidity and operational risk management:

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    Credit Risk

    The consultancy and outsourcing of credit risk management granted by Numeravi’s consultants, aims to provide institutions with the necessary tools to maintain an effective control on credit risk, know and to mitigate the costs that originate it.

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    Liquidity and mismatch risk

    The key element for liquidity risk management is the cash flows projections from assets (mainly loans portfolio and investments) and liabilities (deposits and other debt) that allow to identify risks arising from insufficient resources to face the institution’s obligations.

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    Credit Scoring

    The credit scoring models are tools to objectively, accurately, efficiently and systematically evaluate the risk of default. We built credit scorings applicable to:

     

    Evaluate loan applications

    Admission Scorings

    I. Decision criterion for grant loans, based on a risk measure represented by a probability of default, a score or an applicants’ rating.

    II. Determine loan limits to applicants.

    Measure the current costumers’ risk

    Rating Scorings

    I. Detect possible increases in the risks of current customers before they fall into default.

    II. Estimate default probabilities for:

    II.1 Loans portfolio rating.

    II.2 Calculate the reserves or loan provisions.

    II.3 Calculate the capital by credit risk

    III. Have useful information to focus restructuring and collection actions to those debtors that have the biggest probability of default.

    IV. Determine increases in loan limits.

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    Systems to calculate lending interest rates

    We also offer automated systems for calculating lending interest rates broken down by rating, term and borrowed amount, considering all the costs and revenues associated with the type of loan.

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    Credit rating and reserves

    We offer computer systems for the rating of mortgages, commercial and consumer loans portfolios. These systems apply:

    • The rating models established in the Mexican regulation (Logit formulas) which are based on variables related to the borrower’s payments performance, such as late payments or payments’ integrality, loan characteristics, as total and remaining term, payment frequency, destination of the loan, among others.
    • Any logit model built specifically for a portfolio. These models can be based on credit record, financial ratios, economic variables, among others.
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    Market Risk management systems

    We offer a robust system to calculate the market value at risk of investment portfolios, that also estimates the credit risk and the portfolios’ liquidity.

    Our system also calculates the value at risk of the difference between assets and liabilities that are sensible to market risk factors.   This VaR represents the potential loss of equity value.

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    Operational Risk management

    We advise institutions at each stage necessary to consolidate the operational risk management function, among others:

    • The definition of the strategy and the planning of actions and resources.
    • The implementation of the operational risk management cycle. We accompany the institutions in the execution of operational risk management actions.
    • We advise in the monitoring, timely intervention, mitigation and estimation of the necessary capital for operational risk.
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    Asset and liability management and mismatch risk

    Through asset and liability management (ALM) institutions obtain a broad vision and manage their exposure to mismatch risk. This allows them to plan strategies to prevent a situation of lack of liquidity or exposure to mismatch risk that could affect the value of the institution’s equity (assets – liabilities).

    Mismatch risk in banks and other credit institutions, may result in loss of equity value or reduction of income if their cost of funding increase and the adjustment of their lending rates has to be postponed due to differences between maturities of assets and liabilities.

    Numeravi provides systems and advice for ALM whose main objective is to maintain the institution’s value through the estimation and management of:

    • The maximum probable loss of the value institution’s equity.
    • The expected revenue reduction.
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    Audit or technical assessment of risks management

    We carry out the technical assessment to risk estimation methodologies as well as compliance audit of established regulation.