A credit analyst evaluates clients’ financial information to figure out their creditworthiness. S/he analyses financial information from various sources (company balance sheets, news reports, etc) and assesses the risk of issuing credit to the client. These professionals are mostly employed in corporate lending arms of banks, investment banks, credit rating agencies, financial institutions, mutual fund houses, and private equity firms.
What do they do?
When a firm or company wants to take a loan, someone at the bank that has been approached will examine whether lending money to that party is safe. This professional, called a credit analyst, needs to figure out if the lender will be able recover its money.
Credit analysis exposes you to diverse industries and organisations, which could include large corporates, small and medium enterprises, partnership or proprietorship firms, as well as other banks. This makes it “one of the most enriching career options for a professional wanting to pursue a career in finance,” says Swati Agrawal, regional head of rating agency Credit Analysis and Research Ltd (CARE) in New Delhi.
“From the smallest firms to the biggest companies in the world, everyone needs to be assessed before a bank issues them a loan. So, you can imagine the opportunity,” says Apoorv Jain, a credit analyst with a leading multinational bank in Mumbai, who earlier worked with a private sector Indian bank and a rating agency.
“We are ensuring that the bank’s money goes into the right hands,” adds Jain. With a Master’s in finance and control from the University of Delhi, Jain says he chose this line because it’s “very interesting and challenging. You get to know the risks a company faces.”
These professionals are mostly employed in corporate lending arms of banks, investment banks, credit rating agencies, financial institutions, mutual fund houses, and private equity firms. Knowledge process outsourcing (KPO) firms, too, recruit credit analysts. “Credit analysts are widely sought after by banks, financial institutions, investment banks, private equity players, mutual fund houses, etc,” says Agrawal.
In a credit rating agency, a credit analyst interacts with the client, who wants to raise debt, for information. S/he also analyses the information provided by the company, checks out the industry and financial data related to it and goes for plant/site visit to better understand the operational aspects. The analyst – with a senior manager – has to constantly interact with the client to know about, for example, the business plan, the rationale behind it, how it will be funded, how challenges are addressed and the company’s vision and so on.
Who’s suited to this field? According to Jain, this work is not for a “very outgoing” person who likes to meet a “hundred people every day. It requires patience. You study the company, meet and talk to the client. It’s a desk job.” At the same time, “it’s a great choice in that it gives you an idea of what companies are doing. It gives you an idea of current practices in an industry.”
Jain adds that knowledge of good accountancy standards will stand you in good stead. And so will strong communication skills in English for writing reports and making presentations.
. Good quantitative aptitude
. Sharp analytical and organisational skills
. Confidence. Strong written and oral communication skills in English (for report-writing, making presentations)
. Ability to multi-task and perform under deadlines
. A sense of ethics
How do I get there?
You may opt for any subject combination at the plus two and Bachelor’s level. Industry professionals say it’s not necessary to opt for the commerce stream in senior school. However, subjects that hone your quantitative and analytical skills will give you a leg-up. Many employers ask for BTech, BCom or CA qualifications, but you need a Master’s degree, such as an MBA, to grow in your career. Credit rating agencies typically recruit MBAs in finance, preferably with a BCom or BTech degree. To gain an edge, you may consider top-up credentials such as certified financial analyst and financial risk manager.