Interviewer view · keep this screen to yourself

Why did a Singapore bank's retail profit fall?

You run the case. Read the prompt, answer questions from the notes below, and share data only when the candidate asks for it or gets stuck. Score at the end.

Case timer

00:00

Target length:

1. Read the prompt aloud

Read it slowly, then pause. Let the candidate ask questions before they structure.

A Singapore bank's retail unit saw profit before tax fall from SGD 190 million to SGD 115 million. The exhibit shows the main lines. What drove the fall, and what should the bank do?

Format note: Interviewer-led: the interviewer shows the table and asks you to find the driver.

2. Answers to clarifying questions

Give these answers only if the candidate asks. If they ask something not listed, give a sensible answer or say it does not matter here.

If asked: Did the loan book grow?
Answer: No, loans were flat at about SGD 20 billion.
If asked: What happened to interest rates?
Answer: Market rates fell during the year.
If asked: Is the question about the retail unit only?
Answer: Yes, the retail banking unit.

3. The hypothesis a strong candidate states

Listen for an early, testable guess like this one. It does not need to match word for word.

Loans were flat and rates fell, so my hypothesis is that a shrinking net interest margin drives most of the fall, with credit losses possibly adding to it.

4. A model structure

Compare the candidate's structure with this one. A different split can be just as good if it is clean and fits the problem.

Bank profit bridge
- Key: Net interest income (loans x NIM)
- Fee income
- Operating costs and cost/income ratio
- Credit losses (loans x cost of risk)

Exhibit 1

Reveal to candidate: when they ask for this data, say "Open Exhibit 1" (they press "Show exhibit 1" on their screen).

Retail banking unit, two years (SGD millions, illustrative)

Retail banking unit, two years (SGD millions, illustrative)
Line	Last year	This year
Loans (average)	20,000	20,000
Net interest margin (%)	2	1.7
Net interest income	400	340
Fee income	100	110
Operating costs	250	255
Credit losses	60	80
Profit before tax	190	115

So-what

Net interest income fell by 60, most of the 75 fall in profit. Credit losses added 20; fees partly offset.

5. The working, step by step

Each step shows how a strong candidate works it out. Share a new fact from it only when the candidate asks or is stuck, and let them do the math: the result in the dark box is what they should reach.

Step 1: NII this year
What a strong candidate does: SGD 20,000 million of loans at a 1.7 percent NIM, down from 2.0 percent (SGD 400 million last year).
NII this year (SGD m): 20,000 × 0.017 = 340
Step 2: Credit losses this year
What a strong candidate does: Cost of risk rose from 0.3 to 0.4 percent of loans (SGD 60 million last year).
Credit losses this year (SGD m): 20,000 × 0.004 = 80
Step 3: Profit bridge
What a strong candidate does: NII change, plus fee change, minus cost change, minus credit-loss change.
Change in profit (SGD m): (340 - 400) + (110 - 100) - (255 - 250) - (80 - 60) = -75
Step 4: Profit this year
What a strong candidate does: NII plus fees minus costs minus credit losses.
Profit before tax (SGD m): 340 + 110 - 255 - 80 = 115
Step 5: Cost/income ratio last year
What a strong candidate does: Costs divided by NII plus fees.
Cost/income last year (%): 250 ÷ (400 + 100) × 100 = 50
Step 6: Cost/income ratio this year
What a strong candidate does: Costs barely moved, but income fell, so efficiency looks worse.
Cost/income this year (%): 255 ÷ (340 + 110) × 100 = 56.67

The recommendation to listen for

At the end, say: "The CEO walks in. What is your recommendation?"

Profit fell by SGD 75 million mainly because the net interest margin shrank as rates fell. First, lower NIM cut net interest income by SGD 60 million, most of the fall. Second, credit losses rose by SGD 20 million as the cost of risk went from 0.3 to 0.4 percent, which needs watching. Third, fees grew by SGD 10 million, a sign that fee products can offset part of the rate effect. Actions: review deposit pricing so rates paid fall in line with market rates, grow fee income from wealth and payments, check which loan segments drove the higher losses, and hold costs flat to bring the cost/income ratio back toward 50 percent.

Risks a strong answer names: Cutting deposit rates too fast may lose deposits to rivals; Credit losses may keep rising if the economy slows.

Next steps: Split credit losses by product (cards, personal loans, mortgages); Review deposit rates against competitors.

Strong versus weak

A strong answer

Used the bank lines, built a profit bridge, found NIM as the main driver, and flagged credit losses as a second issue.

A weak answer

Looked for cost of goods sold, or blamed operating costs, which barely moved.

Score the candidate

Score each criterion from 1 to 5. A 2 or a 4 sits between the descriptions.

Structuring

1: No clear structure, or a memorized framework that does not fit the problem.
3: A sensible structure, but with some overlap, a gap, or no clear priority.
5: A structure built for this problem, with no overlap and no gaps, a stated hypothesis, and a clear first step.

Math

1: Frequent errors, no units, or needed heavy help to finish.
3: Right answers but slow or messy working, or one error caught late.
5: Accurate and clearly narrated, with units, a sense check, and what the number means.

Exhibit reading

1: Read the chart aloud without finding the number that matters.
3: Found the key number but gave only part of the so-what.
5: Pulled the right number quickly and said what it means for the case.

Synthesis

1: Summarized what was done, with no clear answer.
3: Gave an answer, but with weak reasons or no next step.
5: Answer first, then two or three reasons with numbers, the main risk, and next steps.

Communication

1: Hard to follow: long silences, no signposting.
3: Clear most of the time, with some rambling.
5: Calm and concise, signposted each step, and checked in with the interviewer.

Total

0 out of 25

Score all five criteria to see the band and the feedback template.