Core deposits are a major funding source for financial institutions. Their size, growth, stability and composition are key factors that directly impact the institutions’ interest rate risk profile, earnings at risk and economic value.

Knowing what factors drive deposit growth and deposit retention is essential to help financial institutions maintain a stable deposit base. Yet, very few allocate the resources required to identify and understand the factors driving their growth, retention and decay.

CetoLogic’s Non-Maturity Deposit (NMD) Measurement and Modeling service assists your institution to identify the growth and stability of non-maturity deposits and provides insights as to how the projected increases in interest rates may affect your institution’s risk profile, liquidity and profitability.

NMD Measurement and Modeling service:

  • Measures the impact of changes in deposit growth, deposit mix and retention rates on profitability and liquidity.
  • Assesses the impact of increases in interest rates on an institution’s funding profile.
  • Measures the influence of increases in interest rates on deposit growth, deposit retention, profitability, liquidity and risk profile.
  • Develops predictive model to incorporate institutions’ historical deposit data to assess if deposits are stable or temporary.

A stable deposit base is essential to drive sustainable and profitable growth.  Given the projected, imminent increases in the interest rate, it is critical for financial institutions to understand the impact of these changes on their risk profile, liquidity and profitability.

Identifying the factors that drive deposit growth is a fundamental requirement to manage a stable deposit base.

Click here for a Non-Maturity Deposits Measurement and Modeling service brochure.