Portfolio of Loans, Guarantees and Provisions

Economic development is realized on the resources of the society. In addition to work and capital accumulation, financial resources play an important role in economic evolution and growth. Economic agents that do not currently have the necessary financial resources use the bank loans. From this perspective, the banking system is important in ensuring the financing of economic activities. The involvement of banks in lending involves the prospect of risk-taking, which is often imminent. We can talk about a loan portfolio, which the bank has to handle in a prudential way. An important element in hedging is the provisioning. They are formed at the beginning of the following year from the income achieved in the balance sheet of the previous year and must be weighted at the level of the pre-calculated risks. The authors also refer to the fact that bank risks can exceed, as a result, the level of provisions set up to cover the losses. It also underlines the need for the guarantees to be granted, especially long-term loans, to be sound, real and secured to cover the effect of the disappearance or diminution of the value of these guarantees. In this study, the authors focus on analyzing the correlation between the loan portfolio and the provisioning. Relevant data will be presented to highlight the level of contracted loans and, on this basis, the provisions made. Statistical and econometric methods and models will be used (data series, tables, graphs etc.) which quantify the correlation between the loan portfolio and the provisioning requirements to cover the credit risks.