Regulators and shareholders alike are showing increasing interest in PPNR projections. Robust quantitative models for forecasting balances and revenues can help banks not only improve regulatory compliance, but also generate more efficient, flexible, and reliable base and stress forecasts and rapidly test what-if scenarios. In addition, the models enable banks to strengthen their analytical and capital-allocation capabilities, improve the accuracy of capital requirements, align forecasts and metrics for stress-testing and budgetary processes, and free up management time for value-creating business activities.
The bank needed to develop expertise in PPNR modeling at speed and put in place supporting organizational structures and processes. So it asked us to help it build a first set of models and develop the capabilities it needed to continue building more. It was looking not just for analytical and modeling support, but for a pragmatic approach that would deliver results quickly and a top-management perspective that would ensure the effort generated business value for the whole organization.