Camels

A framework rating banks on six areas: capital adequacy, asset quality, management, earnings, liquidity and sensitivity to market risk. Each is scored separately and then combined.

Where you will meet it

Camels appears in 3 learning outcomes on the CFA syllabus. A few of them:

• Explain the CAMELS approach to bank analysis, which covers capital adequacy, quality of assets, management, earnings, liquidity and sensitivity, with its main ratios and its limitations
  CFA Level II · Financial Statement Analysis

  “CAMELS rates six areas.”

• Analyse a bank using its financial statements and other considerations
  CFA Level II · Financial Statement Analysis

  “Analysing a bank means working through its statements with the CAMELS lens and then asking what the numbers imply together.”

• Explain further considerations that matter when analysing a bank
  CFA Level II · Financial Statement Analysis

  “Some factors sit outside the CAMELS scores but matter to a bank's risk.”

See also

Liquidity

Practise it

• Today's practice question One question, with every wrong option explained.
• Free Level I diagnostic test Twelve questions that show which topics to start with.
• Free finance calculators Check your arithmetic on the exam's core formulas.

All terms beginning with C · Glossary