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CAMEL is a supervisory rating system used by bank regulators to assess the health and performance of financial institutions. The acronym stands for Capital adequacy, Asset quality, Management quality, Earnings and liquidity.
Banks and financial institutions that are regulated by bank supervisory authorities are required to file CAMEL reports.
Filling out a CAMEL report involves providing relevant financial data and performance metrics that correspond to the CAMEL components—Capital, Asset quality, Management, Earnings, and Liquidity. This typically requires financial statements and risk assessments.
The purpose of CAMEL is to provide regulators with a systematic method to evaluate the overall condition and risk profile of banks and financial institutions, ensuring effective oversight and management of potential risks.
Information that must be reported on CAMEL includes financial ratios, capital levels, asset classifications, management practices, earnings performance, and liquidity measures.
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