Financial Services
Repricing a retail lending book
Six years of growth, less profit each year. We rebuilt the pricing floor.
Aldermere had grown its retail lending book for six straight years and made less money in each of them. Pricing was set by precedent — last year's rate card, adjusted at the margin — and nobody could say which segments were subsidising which. The board had approved the growth targets and was being asked to approve another year of them.
We rebuilt the pricing floor from the bottom: risk-adjusted cost of capital by segment, tested against three years of book performance. Every product was priced against what it actually cost to originate, fund and hold. Where a segment could not clear the floor, we said so, and put a number on what withdrawing would cost.
Margin recovered without a material fall in volume. Two segments were repriced and one was closed to new business. The floor is now recalculated each quarter by Aldermere's own risk team rather than by us.
+38 bps
Net interest margin
97%
Volume retained
2 of 9
Segments repriced
Case studies
More work
Three engagements where the numbers were the easy part, the decision was not, and the answer still held once the room had moved on.
Forty more engagements sit behind these six.
