What does the Bank Modeling program cover?

Analyzing and valuing banks is a completely different ball game when compared to a regular company. The analysis operates on unique methodologies that differ vastly from traditional approaches.

Watch our expert financial modeler and trainer Rahul Sonthalia, CFA, CMA provides a short snippet on the key components of a bank model and how our 3-day program can help you develop a robust bank valuation from scratch.

Learning Objectives


Forecast and develop an integrated bank financial model starting from a blank excel


Analyze a bank’s financial statements and interaction between its key assets and liabilities


Discover the impact of IFRS 9 & Basel III on a bank's financial health


Value a bank using cash flows and multiples-based valuation tools


Learn and apply advanced excel tools and functions


Understand why bank's are regulated

Program Agenda

Introduction to Bank Model

Key Excel tools used in Bank Financial Modeling
(Logical & Date functions, Data Tables, Index & Match, Choose)

Introduction to the Case Study

Model design and structure for the case study bank
Know the key model outputs and their drivers
Understand the requisite inputs
Developing cell styles for model transparency and review

Introduction to the Bank’s Financial Statements

Understanding a bank’s balance sheet – Key assets and liabilities
Understanding a bank’s income statement and different sources of income
Understanding a bank’s risk evaluation metrics

Extracting, cleaning and normalizing historical financial statements of a bank from annual reports
Building error checks in the model

Balance Sheets

Loan portfolio – overall and segmental breakdown
NPL and credit loss provisions
Trading assets and investments
Other non – core assets: PP&E, etc.
Deposits portfolio – overall and segmental breakdown
Central Bank, Interbank and other liabilities
Funding requirement – Debt and Equity
Regulatory Tier 1 and Tier 2 capital requirement for a bank
The Model Balancer of the bank’s balance sheet

Income Statement

Net Interest Income
Interest Income – Overall and segmental breakdown
Interest Expense – Overall and segmental breakdown
Net Fee & Commission Income
Trading Income
Credit loss provisions
Other operating costs and taxes
Dividend Pay-out Ratio:
Using historical or a target pay-out ratio
Linking dividends pay-out to target capital requirements (surplus capital method)


Profitability Ratios
Cost to income and Cost to asset
Capital Ratios:
Tier 1 and Tier 2 capital ratios
Gross and Net leverage ratios
Asset quality ratios:
Gross and Net NPL ratios
Coverage ratio and more

Bank Valuation – Discounted Cash Flows & Trading Comps

Calculating a bank’s Cost of Equity and understanding the right selection for different CAPM inputs
Estimating terminal value – growth rate and multiple methods
Valuation using DDM and FCFE methods
Performing scenario and sensitivity analysis to DCF valuation outputs
Selecting the right set of comps to the subjected comps
Normalizing the financial metrics of peer groups
Using P/E and P/B multiples to value the subject banks

Presenting the model outputs

Using high-quality, flexible charts and developing a management dashboard

Combo charts, Football Field Chart, etc.
Camera tools
Dashboard with scenario manager switch

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