Bank Earnings Quality Due Diligence
Anweshna reads income statements and MD&A disclosures to separate a bank's sustainable earnings power from one-time or accounting-driven results.
What it screens for
- Non-interest income sustainability — how much of reported income is fee-based and recurring versus one-off.
- One-time charges — charges that inflate or depress a single period's results without reflecting ongoing performance.
- Provision trends — whether loan-loss provisioning is rising in a way that signals building credit stress.
- Net interest margin (NIM) compression — margin pressure from funding costs or asset repricing.
- Deferred tax asset realizability — whether recorded DTAs are likely to actually be usable.
Why it's a blocking category
Earnings Quality carries a 15% weight and is one of five blocking categories in the Banking ruleset — a score of 70 or above halts the deal for mandatory review. Reported earnings can look healthy while masking NIM compression or unrealizable DTAs; this category exists specifically to catch results that won't hold up once the one-time items are stripped out.
Earnings Quality FAQ
What does Anweshna screen for in Earnings Quality?
Anweshna screens deal documents for non-interest income sustainability, one-time charges, and provision trends, among other signals. See the full list of signals above.
Is Earnings Quality a blocking risk category?
Yes — Earnings Quality carries a 15% weight in Anweshna's composite score and is one of the categories that can independently flag a deal for mandatory review: any document scoring 70 or above here halts the deal until a human reviews it.