What CPM

The solution covers a performance management model and framework based on best practices that enable the bank to measure (Retail and corporate) customers, product and Line of business performance. The solution reconciles figures with balance sheet P&L analytics. In addition, it covers all income and expense balance sheet accounts broken down to different profitability dimensions (customers, product, LOB). Impact of customers’ risk (provision, PD, reserves,) are incorporated. Impact of funding cost/profit are also part of the calculations.


It includes extended profitability elements that cover :

  • Interest income/expenses
  • Fees and commissions
  • Cost of funding 
  • Cost allocation

Generating comprehensive product-wise volumes and revenue MIS for each customer in a specified format by collating data from the Core Banking system, and other relevant sources including Treasury. 

Enabling the implementation of an appropriate Transfer Pricing Mechanism which will allow for calculation of customer-wise profitability for corporate and retail customer segments including profits on Assets, Liability, off-balance sheet products which is currently not possible. This information should be made available at customer level and relationship level. 

Availability of volume, revenue and profitability data at relationship level and also at product level.  Availability of the above information at RM Portfolio level.  Tracking of changes in business volumes and profitability and other key statistics and highlighting them in clearly defined formats. Evaluation of pricing and packaging alternatives and assess their profitability effects, both incrementally and for the entire relationship.

Including Return on Asset (ROA) and other rations (ROE), Net Interest Margin.

It needs to have a cost allocation process that allocate balance sheet cost pools under different cost centers into product level costs. The cost allocation model should allow different methods of allocation depending on the nature of the cost pool.

(Transfer pricing [TP]) will be calculated to assign transfer rate for each asset and liability. This will enable the bank to isolate interest rate risk in a single bank level funding center.

It will be used according to the cash flow characteristics of the financial product, Cash flow based and non-cash flow-based methods need to be supported.