Credit Risk Management in PostBank
Credit Risk Management in PostBank

Author(s): Stela Papazova
Subject(s): Politics / Political Sciences, Politics, Economy, Business Economy / Management, Economic policy, Financial Markets
Published by: Университет за национално и световно стопанство (УНСС)
Keywords: credit; risk; assessment; strategies; frameworks
Summary/Abstract: Credit risk management is crucial for financial institutions like PostBank, especially given its mission to serve low-income, underserved communities. This research examines the strategies PostBank employs to mitigate credit risk, the specific challenges it faces, and areas for improvement in its risk management framework. Serving a high-risk demographic, PostBank encounters unique risks, including default, concentration, counterparty, collateral, and country-specific risks. These are compounded by challenges like clients’ lack of formal credit histories, economic vulnerability, and regulatory constraints. To address these, PostBank employs various strategies, including credit appraisal, risk-based pricing, portfolio diversification, and alternative credit scoring. The study utilizes both qualitative and quantitative methods, analyzing PostBank's loan portfolio, credit risk metrics, and internal practices. Key findings highlight the effectiveness of PostBank’s risk management practices while recommending enhancements in data analytics, partnerships, client financial literacy, and staff training. By continually adapting its credit risk approach, PostBank can maintain financial health, promote financial inclusion, and fulfill its social mission responsibly. This research underscores the bank's role in balancing financial sustainability with its commitment to underserved populations.

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