1. Asset Liability Management User Guide
  2. Forecast Balance Rules
  3. Examples of Forecast Balance Assumptions

28.5 Examples of Forecast Balance Assumptions

Below are two examples describing how to input assumptions into the Forecast Balance for a product using the target growth method and a product using the rollover capabilities.

Target Growth Example

The following example describes how to model the effect of interest rate changes on growth in a loan product. We will input values that cause the growth rate of loans to decrease as interest rates increase.

  1. Create a new Forecast Balance rule.
  2. Select US dollars in the Currency Selection.
  3. Select the desired product leaf from the product list.
  4. Click the Add icon to add new forecast balance rules.
  5. Select Target Growth as the New Business method.
  6. Select Distributed as the Timing option.
  7. Select Rate-level dependent as the Rate-Volume relationship.
  8. Click the Rate Tiers Tab.
  9. Select a Rate Dependency Pattern from the drop-down list.
  10. Click the New Volume Detail Tab. The two lookup methods for 1% and 4% will appear in the col­umns, next to each bucket. Enter 8% growth for a 1% 3 year rate environment, and 2% growth for a 4% 3 year rate environment.