Is there any important excel modeling used in commerical banking?
Sales job. The PowerPoint to Excel ratio is probably 20:1.
What part of commercial banking? What size bank? For most, it seems modeling is related largely to liquidity risk measurement and asset quality stress tests. Interest rate risk is also modeled, but this is often done through outsourced model. TThis is normally done by the ALM department, although the credit models may be under a different roof.
Other models that a commercial bank may have includes credit score cards, profitability models, probability of default models, and such. Banks this sophisicated normally have treasury departments or a modeling group, but not always. Commercial banks over $10 billion will have capital stress test modeling, which gets more sophisicated when a bank is $50 billion or more. This is called DFAST for the 10 billion banks and CCAR for 50 billion banks.
There is a lot ability to analyze branch networks, conduct other management information systems, and determine inputs for the interest rate risk model/liquidity models. The level of modeling greatly varies between banks. Some do very little and some do some amazing stuff. It really depends on the bank’s attitude towards data, how much they collect, how they store it, etc.
Well I worked in cleantech project finance.
There was hardly any pitching at all, but I did alot of excel modelling.
Depends where in the Bank you are. Retail Banking and Accounting uses alot of excel. I recall the Retail people using a ton of macros when I trained there for my management training program.
^^
For what do you use excel in retail banking ? Macro-generated scorecards and such ?
That’s not exactly what I was thinking of when OP said commercial banking. Most project finance groups are with the capital markets side of things up here, at least with the institutions I’m familiar with. I’m thinking of commercial banking as credit facilities, cash management, trade finance, etc. And I assumed OP was not talking credit analysis type work as he would have just said so.
Honestly, Im having trouble remembering the exact purpose since it was over 10 years ago. I believe it had to do with rolling up data from branches on deposit flow, cash usage, transaction trends etc.
Yeah I know what you mean ; the line can be pretty blurred between Investment Banking and Commercial Banking.
In its most strict definition, Investment Banking deals with securities offering and M&A., so project finance would fall under commercial banking.
Yea sorry for the vagueness.
Very small firm, assets under $1B. Specialize in commerical mortgages, construction, equipment and aviation financing.
Due to the size of the book, my responsibilities include just about everything with the exception of accounting and ALM related stuff.
Built models already for things like RAROC, mortgage loan analysis, f/s analysis with cap rate, interest rate sensitivities, etc.
The problem is, the risk-rated models are difficult (well not possible) to build when your book is new (and small) and the data is not well established.
They are some very sophisicated firms at asset size ranges people on this forum would largely ignore and they employ a lot of people. But generally the ones that size who model are involved in niche lending and not just commercial real estate/mortgages/insert other boring loan type.
I could see you building a cap rate stress test, given the recent trends in those cap rates on the portfolio. You could also build credit stress tests. But I’d assume their need isn’t very high.