Interest rates across products
Profitability across products and clients
Profitability effects from interest rate scenarios
AQProfitability focuses on performance reporting and functionality in three key areas:
- It breaks down profitability across products and clients on both individual and group levels.
- It breaks down the distribution of interest rates on products across the business.
- It allows for dynamic assessment of profitability effects by shocking existing interest rates.
To assess and report interest rates and profitability across potentially tens of thousands of products and clients, we apply advanced visualization methodology to show patterns and trends of massive data volumes in an easy to read and understand fashion.
Result quickly and effortlessly provide deep business insights and important input to optimal business decision-making.
A key driver in client profitability is interest rates on loans, credits and guarantees. AQProfitability allows for a granular break-down of product interest rates across various dimensions.
The distributions of interest rates are shown across dimensions like product(s), regions, branch offices, financial advisors, credit quality, sectors, client size and time-on-book. The assessments take into account (if such exist) defined interest rate spreads and interest rates beyond the accepted spread are easily reported for further investigation.
When profitability is reported in the application it is broken into main components: products, single clients and client groups. By client groups is meant company groups and private households.
The application provides complete and comprehensive profitability assessments. The assessments include considering interest on debt products like loans, credits and guarantees as well as fees from debt products. Income from internal non-debt products and third party products is also included to support financial advisors with complete systematic profitability assessments. The entire cost side of the financial institution is also included and so is the cost of capital and capital requirements.
For each product, single client and client group the return adequacy is reported. It is therefore easy to report client profitability and detect clients below return requirements or with the largest return deteriorations over time. It allows for proactive follow-up with clients that may be heading for difficulties.
An important feature of the application - it makes it possible to perform ad-hoc interest rate changes across any sub-section of the credit portfolio – e.g. across regions, branch office, ratings and sectors etc.
It enables to quickly evaluate expected profitability consequences from adjusting interest rates for particular client subgroups and thus provide import input to business developement and strategize optimal interest rate adjustments.