37. The aim of the Barclays Bank of Zambia is to help customers realize their ambitions. It will provide credit support provided risk levels are acceptable, customers have the ability to repay, have a fall back position and are willing to establish a long-term relationship with the bank.
38. In its credit assessment process, the Barclays Bank of Zambia follows a structured approach based on the proposal's business, financial and lending analyses. The business analysis comprises an assessment of internal factors related to the enterprise such as available resources (physical, financial and human), products, business status, management and succession. An assessment of external factors and industry trends is also carried out. The latter includes an assessment of the legal, economic, political, environmental, social and technological (LEPEST) factors influencing suppliers, competitors and markets (buyers), as well as an evaluation of environmental risks.
39. The financial analysis is characterized by an evaluation of financial statements, capital structure, operating performance, level of liquidity and debt service, in particular operating cash flow.
40. The lending analysis is based on a number of factors, the most important of which being operating cash flows and margins (profit does not equal cash). Terms of trade, ability to recover interest and on-going debt obligations (cash coverage rather than profit coverage) as well as trends are also taken in lending decisions. Once the decision to lend is made, structure of facilities, security, terms and conditions and account conduct are agreed. Structure of facilities relates to decisions over a short-term loan/overdraft (managed on a day-to-day basis), a medium-term loan (linked to cash flow), a long-term loan (specialist transaction), letters of credit or leasing (both to ease cash flow), or bonds/guarantees (depending on terms of trade).
41. In conclusion, the bank is very concerned with the viability of the business proposition and does not make lending decisions based only on the strength of security. The bank will listen to and understand new and progressive business ideas and give them individual recognition. It will provide timely and accessible expertise to make pro-active, prompt and reliable decisions. Strong historical performance places the customer in a good position to borrow. Positive cash generation is essential to satisfactory assessments and good business management is vital. Consequently, to be a strong candidate for credit, the bank recommends to its customers to:
keep the bank regularly informed of the evolution of the business, regardless of whether money is borrowed, in a timely fashion and/or as requested;
keep up with global economic trends and technological changes;
delegate roles to managers, i.e. a separate finance manager, with a good mix of skills;
exercise strong discipline, in particular with regard to cash and cost control.
