What is a portfolio?

In banking, the term is often used"Portfolio", to denote a set of services. Since banks basically either lend or invest, types of portfolios can be credit and investment.

So, what is a loan portfolio? A natural or legal person takes money from the bank at a loan interest. Debt on the principal amount of the loan and incoming interest and is a loan portfolio. If to be more precise, the loan portfolio is the aggregate of the debt of a certain client for the main doug or credit operations for a specific date. As you know, interest can be charged on the whole loan amount immediately or on the balance of the loan debt, so depending on the loan terms, for a certain date the total debt will be different. In addition, there are conditions for early repayment.

There are several types of loan portfolios. The bank issues loans to individuals and legal entities, depending on this, and different definitions are formed, what is the portfolio.

Types of portfolios

Separate into risk-neutral and riskyloan portfolio. The first has a low level of risk, the second - high. Also for individuals, they offer an optimal balanced loan portfolio with moderate interest rates and a smooth repayment schedule.

In addition to credit, banks provideinvestment portfolios - in other words, a set of investments. Investments can be securities, real money. Depending on the riskiness of the portfolio, they are divided into aggressive or passive. In the first type, assets are formed with high profitability and high level of risk, in the second case - they structure the portfolio according to the market index.

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