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Profitability Modeling
Executives at consumer lending businesses are faced with many new challenges from changing market conditions that include higher volatility in loss rates, shrinking population of ‘good’ customers, increased costs of funding and increased government oversight.
Yet the business needs to grow, losses have to be managed and profits maximized. As the bottom-line comes under pressure, Executives may need new tools to effectively sustain the balancing act of meeting marketing objectives, upholding risk management policies, complying to new standards and remaining highly profitable - in a fiercely competitive environment.
At The Skill Mill, we will use our proprietary BookProfitTM framework to not only track your portfolio profitability using predefined segmentation programs but also provide segment-based profitability scenario analysis - for minute changes in your internal or external business environment.
For instance, if loss rates for 5 out of say 20 segments of your portfolio are expected to increase by 35% over the next six months, we can assess in-depth impact of the same on your portfolio profitability.
The possible courses of action that arise from this analysis could be to surgically increase pricing, shore-up collections efforts, tighten underwriting or sell-off the affected portfolio among many other useful insights.
Our profitability analytics services can additionally measure the cost-benefit of each of these possibilities and enable informed decision making by the senior management.
Some key highlights of our BookProfitTM framework include:
- Portfolio can be separated into 10-100 segments,
- Profit measures include risk-adjusted returns
- Monthly performance variance is minutely evaluated
- Scenario Analysis drills down to segment based, cross-functional metrics
For more information on our profitability services, please contact us at info@theskillmill.com.
Also, please take a moment to answer a brief survey question and view responses by retail bankers from across the world:
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