Balance Sheet Optimization

Overview

Provides a structured framework for analyzing and optimizing bank balance sheet composition across competing objectives—return on equity, regulatory capital efficiency, liquidity compliance, interest margin, and risk appetite. Integrates RWA optimization, FTP-adjusted product economics, HQLA portfolio construction, and strategic asset allocation into actionable ALCO recommendations.

When to Use

• Conducting strategic balance sheet reviews for ALCO or board
• Evaluating asset class allocation for optimal risk-adjusted returns
• Analyzing RWA density reduction opportunities
• Optimizing the HQLA investment portfolio for yield within regulatory constraints
• Assessing FTP-adjusted profitability of business lines for capital allocation decisions
• Preparing medium-term balance sheet strategy and capital deployment plans

Required Inputs