What is Credit Analysis?
Credit analysis is the evaluation of a borrower’s ability and willingness to repay debt obligations. It examines financial statements, cash flow, collateral, industry, management, and macro factors.
How It Works
- Analyze financials and ratios (leverage, coverage, liquidity).
- Assess qualitative factors (sector, management, governance).
- Assign an internal rating and recommend terms.
Saudi Context
Saudi banks under SAMA apply structured credit-analysis frameworks, often integrating Kafalah guarantee eligibility for SMEs and ZATCA tax-status checks for corporates.
Example
A Saudi bank analyses a contractor’s DSCR (1.4x), leverage (debt/EBITDA 3.2x), and three-year cash-flow trend before approving a SAR 30 million facility.