Banking Industry Modelling:

Practical and Technical Training Program

Training Introduction:

The banking industry operates within a highly regulated, capital-intensive, and risk-sensitive environment. Accurately modelling a bank's financials requires a deep understanding of how banks generate income, manage risk, comply with capital requirements, and maintain liquidity. This Banking Industry Modelling course equips participants with the essential tools to model the financial statements of commercial and investment banks and evaluate their performance, valuation, and risk profile.

Across 16 modules, participants will build fully integrated financial models for banks in Excel, develop forecasting techniques, model interest income and credit losses, and understand how to evaluate banks using key regulatory ratios, Basel frameworks and valuation methods specific to the banking sector.

The course includes real-world scenarios, regulatory considerations, and analytical frameworks tailored to financial institutions.

 

Course Objectives:

By the end of the training, participants will be able to:

• Understand how banks operate and generate revenue
• Build a full financial model of a commercial or investment bank
• Model interest income, loan loss provisions, and net interest margins
• Integrate balance sheets, income statements, and cash flows specific to banks
• Apply regulatory frameworks like Basel III/IV and model capital adequacy
• Evaluate bank performance using key financial and regulatory ratios
• Perform valuation of banks using comparable methods and intrinsic models
• Assess credit, liquidity, and market risk in a modeling context

 

Target Audience:

• Financial Analysts and Bank Associates
• Corporate Finance and Treasury Professionals
• Risk and Regulatory Reporting Teams
• Investment Bankers and Valuation Experts
• Private Equity and Buy-Side Analysts
• Business Students with a focus on Finance or Banking
• Central Bankers and Financial Regulators

 

Course Duration:

4 Weeks (typically 15 days depending on format)

 

Course Content

Module 1: Overview of the Banking Industry

• Types of banks: retail, commercial, investment, central
• Business models and revenue streams
• Key banking products: loans, deposits, securities, services
• Understanding bank-specific financial statements

Module 2: Structure of Bank Financial Statements

• Differences from corporate financial statements
• Breakdown of balance sheet and income statement
• Introduction to regulatory capital and liquidity disclosures
• IFRS vs. GAAP accounting for banks

Module 3: Interest Income and Interest Expense Modelling

• Modelling interest-earning assets and interest-bearing liabilities
• Yield on assets and cost of funds
• Net interest income (NII) and net interest margin (NIM)
• Gap analysis and interest rate sensitivity

Module 4: Modelling Non-Interest Income and Expenses

• Fee-based income (e.g., cards, underwriting, wealth management)
• Trading and investment income
• Modelling non-interest expenses: staff, tech, admin
• Cost-to-income ratio analysis

Module 5: Loan Portfolio and Credit Risk Modelling

• Loan classification by type and risk
• Non-performing loans (NPLs) and loan loss provisions
• Expected credit losses (IFRS 9 / CECL frameworks)
• Provision coverage ratio and credit risk metrics

Module 6: Deposit Base and Liability Modeling

• Types of deposits: demand, savings, term
• Modelling customer behaviour and deposit stability
• Funding structure and maturity analysis
• Cost of funds and interest expense forecasting

Module 7: Capital Adequacy and Basel Regulations

• Basel III/IV framework: Tier 1, Tier 2 capital
• Risk-weighted assets (RWAs) calculation
• Capital adequacy ratio (CAR), CET1, leverage ratio
• Stress testing capital buffers

Module 8: Liquidity Risk Modelling

• Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR)
• Modelling short-term and long-term liquidity needs
• Stress scenarios and liquidity contingency planning
• Regulatory liquidity disclosures

Module 9: Modelling the Bank’s Balance Sheet

• Forecasting assets and liabilities
• Building loan and deposit schedules
• Cash and reserve requirements
• Consolidating regulatory and business views

Module 10: Income Statement and Profitability Modelling

• Forecasting revenue, provision, and expense lines
• Pre-provision operating profit (PPOP) modelling
• Modelling taxes and minority interests
• Building a fully integrated income statement

Module 11: Cash Flow Modelling for Banks

• Why traditional cash flow modelling is different for banks
• Indirect cash flow method from balance sheet movements
• Reconciling operational, investing, and financing flows
• Liquidity stress cash flow simulation

Module 12: Key Banking Ratios and Performance Metrics

• Profitability: ROA, ROE, NIM, PPOP
• Efficiency: cost-to-income, operating leverage
• Risk: NPL ratio, coverage ratio, capital adequacy
• Growth and market metrics: loan/deposit growth, EPS

Module 13: Valuation of Banks – Relative and Intrinsic Methods

• Price to Book (P/B), Price to Earnings (P/E)
• ROE vs. Cost of Equity (COE) and implied multiples
• Dividend Discount Model (DDM) for banks
• Residual income model for intrinsic value

Module 14: Scenario and Sensitivity Analysis

• Stress testing: credit shocks, interest rate hikes, deposit flight
• Sensitivity to NPLs, NIM compression, capital ratios
• Scenario building for recession, inflation, and liquidity crunches
• Using Excel data tables and dynamic dashboards

Module 15: Integrated Bank Financial Model – Build from Scratch

• Linking income statement, balance sheet, and regulatory ratios
• Inputs, assumptions, drivers, and outputs
• Forecasting for 5–10 years under base and stress cases
• Creating summary sheets for stakeholders

Module 16: Capstone Case Study – Real Bank Modelling Project

• Participants model a real or simulated bank
• Forecast core business, evaluate credit and liquidity risk
• Apply valuation methods and write an investment memo
• Present model outputs and defend assumptions

 

Assessment and Certification:

• Module quizzes and exercises
• Capstone bank modelling assignment
• Peer review or instructor evaluation
• Certificate of Completion for all successful participants

 

Delivery Format:

• Live instructor-led training (virtual or in-person)
• Hands-on Excel model building with provided templates
• Industry case studies from global and regional banks
• Optional follow-up coaching or project support

 

Pre-requisites:

• Basic Excel and financial modelling skills
• Fundamental understanding of finance or banking principles
• No prior banking experience required taught from the ground up