Moody's Corporation · NYSE:MCO
Moody's — Credit Forecast Small Business Webinar (July 2021)
48 slides from Moody's's conference presentation, Jul 28, 2021
Slide 1: CreditForecast Small Business Product Overview
CreditForecast Small Business Product Overview Exclusive Forecasts, Data and Analysis of Small Business Credit
Slide 2: Key Features and Benefits
CreditForecast Small Business Key Features and Benefits • CreditForecast Small Make better strategic and tactical business Business addresses an important gap in existing risk decisions management tools by linking small business credit performance with underlying Gain insight on how US and local eco
Slide 3: A joint product offering from Equifax, SBFE and Moody's Analytics
CreditForecast Small Business A joint product offering from Equifax, SBFE* and Moody’s Analytics for SBFE consortium members Equifax / SBFE Credit Data Moody’s Analytics • Origination counts and balances • Economic variables • Outstanding accounts and balances, high • Demographic variables credit li
Slide 4: Product Features
CreditForecast Small Business Product Features Financial Non-Financial Scenario-conditioned projections with associated narratives » Term Loan » Trade supplier » Commercial Card » Services » Business Lease (Telecom, » Other revolving electric utilities, ‒ Line of Credit etc.) ‒ Open Ended ‒ Letter o
Slide 5: Views
Views Sample views Credit Forecast Small Business 5
Slide 6: Current Model Inventory
Current Model Inventory LOB Type LOB PD CLP Non-Financial Services Trade Credit Financial Loan Card Lease Other Revolving Credit Forecast Small Business 6
Slide 7: Use Cases
CreditForecast Small Business Use Cases Risk Performance Early warning management monitoring signal Industry trend Underwriting / Scenario analysis & Originations analysis economic Strategy insights Regulatory Stress testing Benchmarking Reporting: CECL Credit Forecast Small Business 7
Slide 8: Data
Data
Slide 9: Number of Accounts (~10% Sample)
Number of Accounts (~ 10% Sample) By Category Category # Number of # Number of Businesses Loans Commercial Card 1,502,732 1,584,241 Business Leases 610,238 985,592 Term Loans 996,622 1,423,937 Trade Supplier 76,885 78,888 Services 69,583 71,467 Other Revolving 2,347,157 2,891,767 Credit Forecast Sma
Slide 10: Data: Firmographics
Data Firmographics Variable Values Geo All State/5 Digit Zip code Industry 2 to 6 Digit NAICS codes Size of Business Small, Large, Unknown Number of Employees 4 Bands Annual Sales 5 Bands Public Company Yes, No, Unknown Years in Business Early 1900’s to current Credit Forecast Small Business 10
Slide 11: Data: Loan Characteristics
Data Loan Characteristics [2012- 2020 September] Variable Values Account Type Financial Non- Financial Secured Yes, No Origination Source Bank, Credit Union, etc. Government Guarantee Program SBA 7A, SBA low doc, SBA Express, SBA subsidized program Term, Balance, Delinquencies, Defaults, Prepayments
Slide 12: Data Composition
Data Composition • The data largely include loans from banks and financial institutions. • The number of SBA loans is around ~1.1 million • The solution includes trades from financial and non-financial lenders • We cover approximately 60% of the businesses • The impact of pandemic is not so pronounc
Slide 13: Insights from Data
Insights from Data
Slide 14: Default Account Rate: Commercial Card
Default Account Rate Commercial Card Credit Forecast Small Business 14
Slide 15: Default Account Rate: Term Loans
Default Account Rate Term Loans Credit Forecast Small Business 15
Slide 16: Default Account Rate: Other Revolving Products
Default Account Rate Other Revolving Products Credit Forecast Small Business 16
Slide 17: Default Account Rate: Business Lease
Default Account Rate Business Lease Credit Forecast Small Business 17
Slide 18: Default Account Rate: Services
Default Account Rate Services Credit Forecast Small Business 18
Slide 19: Average Origination Limit Over Time
Average Origination Limit Over time Commercial Card Credit Forecast Small Business 19
Slide 20: Dimensions: Commercial Card
Dimensions Commercial Card Dimensions Levels Number of Employees < 5, 6~20, >20, Missing Annual Sales <249K, 250~499K, 500~999K, > 999K, Missing Business Size Big, Small, Missing Year in Business <=5 Years, 6~20 Years, > 20 Years Industry 2 Digit NAICS Code (20 Industries) Region National, State, MS
Slide 21: Default Account Rate by Employees: Commercial Card
Default Account Rate by Employees Commercial Card Credit Forecast Small Business 21
Slide 22: Default Account Rate by Employees: Services
Default Account Rate by Employees Services Credit Forecast Small Business 22
Slide 23: Default Account Rate by Annual Sales
Default Account Rate by Annual Sales Commercial Card Credit Forecast Small Business 23
Slide 24: Default Account Rate by Business Size
Default Account Rate by Business Size Commercial Card Credit Forecast Small Business 24
Slide 25: Default Account Rate by 2-Digit NAICS: Commercial Card
Default Account Rate by 2-Digit NAICS Commercial Card Credit Forecast Small Business 25
Slide 26: Default Account Rate by 2-Digit NAICS: Services
Default Account Rate by 2-Digit NAICS Services Credit Forecast Small Business 26
Slide 27: Default Account Rate by Year in Business
Default Account Rate by Year in Business Commercial Card Credit Forecast Small Business 27
Slide 28: Default Account Rate by Region
Default Account Rate by Region Commercial Card Credit Forecast Small Business 28
Slide 29: Florida by Industry
Florida by Industry Commercial Card Credit Forecast Small Business 29
Slide 30: Florida by Employees
Florida by Employees Commercial Card Credit Forecast Small Business 30
Slide 31: Commercial Card Default Rates
Commercial Card Default Rates Commercial Card Credit Forecast Small Business 31
Slide 32: Business Lease Default Rates
Business Lease Default Rates Business Lease Credit Forecast Small Business 32
Slide 33: Forecasts – Commercial Card & Business Lease
Forecasts – Commercial Card & Business Lease
Slide 34: Model Drivers
Model Drivers All Loans Business Characteristics Macroeconomic Variables Maturation/Seasoning of the loan Unemployment Rate Number of Employees GDP Annual Sales Income: Farm Proprietors Credit Grantor Group Industrial Production Business Size Business Size Year in Business Industry Region Credit For
Slide 35: Identify Troubled Markets in Real Time
Identify Troubled Markets in Real Time Avg Monthly Card Default Rate Forecast (BL): 2021m1 – 2021m12 Credit Forecast Small Business 35
Slide 36: Identify Troubled Markets in Real Time
Identify Troubled Markets in Real Time Avg Monthly BL Default Rate Forecast (BL): 2021m1 – 2021m12 Credit Forecast Small Business 36
Slide 37: Compare Default Risk Across Economic Scenarios
Compare Default Risk Across Economic Scenarios Portfolio-level PD rates (bps), Commercial Card Credit Forecast Small Business 37
Slide 38: Compare Default Risk Across Economic Scenarios
Compare Default Risk Across Economic Scenarios Portfolio-level PD rates (bps), Business Lease Credit Forecast Small Business 38
Slide 39: Analyze Default Risk by Years in Business
Analyze Default Risk by Years in Business Baseline PD rates (bps), Portfolio-level, Commercial Card Credit Forecast Small Business 39
Slide 40: Assess Default Risk by Firm Size (# Employees)
Assess Default Risk by Firm Size (# Employees) Baseline Scenario PD rates (bps) by Number of Employees Credit Forecast Small Business 40
Slide 41: Assess Default Risk by Firm Size (Annual Sales)
Assess Default Risk by Firm Size (Annual Sales) Baseline Scenario PD rates (bps) by sales ($) Credit Forecast Small Business 41
Slide 42: Compare Default Risk Across Industries
Compare Default Risk Across Industries Baseline Scenario PD rates (bps) by NAICS Code Credit Forecast Small Business 42
Slide 43: Solutions
Solutions
Slide 44: Solutions: Model Delivery
Solutions Model Delivery • Our delivery solutions are currently: • Data Buffet/CSV Delivery • Web-based platform to seamlessly view, manipulate, and automate forecast delivery. • Our forthcoming delivery option: • Portfolio Analyzer: A loan-level platform that can generate loss forecasts for client
Slide 45: Portfolio Analyzer (PA) Suite of Models
Portfolio Analyzer (PA) Suite of Models Account level analysis – Connected to macroeconomic factors – Availability of Moody’s Analytics Macroeconomic Forecasts (off-the-shelf and custom scenarios) as well as a connection to Scenario Studio, our global forecasting platform. – Macroeconomic data and f
Slide 46: Contact Us
Contact Us: Subra Thiagarajah Senior Economist NatchieSubramaniam.Thiagarajah@moodys.com Derrek Grunfelder Economist Derrek.Grunfelder-Mccrank@moodys.com Donna Kling Director Donna.kling@moodys.com Pouyan Mashayekh Senior Director Pouyan.Mashayekh@moodys.com
Slide 47: moodysanalytics.com
Moopy’s | Better decisions moodysanalytics.com
Slide 48: Credit Forecast Small Business
© 2021 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liabilit
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