BFC in cooperation with Bankakademie performed a comparative analysis of the profitability of two credit products for a large Georgian bank.

The components of our approach were:

• Mapping credit processes throughout the lending cycle through staff interviews and direct observation;
• Conducting an activity-based costing analysis of loan products by assigning staff salaries to products;
• Calculating product profitability for individual loans and for the overall portfolio;
• Evaluating the efficiency of lending staff in issuing and monitoring loans.

Based on our analysis, the bank changed its procedures and successfully widened its range of loan products.

Our team:

• Precisely determined differences in profitability;
• Enabled senior management to understand key drivers affecting the profitability of lending operations;
• Created a financial model for managerial use to calculate the profitability of other loan products, including new ones;
• Developed strategic and operational recommendations to further improve the efficiency and profitability of lending activities.