INTEREST RATE RISK ANALYSIS for Capital One Financial Corporation – Assignment Help

Interest Rate Risk Analysis

Resources

  • Interest Rate Risk Analysis Scoring Guide.
  • Federal Financial Institutions Examination Council (FFIEC) Search.
  • Writing Feedback Tool.

For this assignment, write a 5–10 page report focusing on the interest rate risk management of your selected firm. Regulatory agencies began to collect relevant information in the 1980s when large numbers of thrifts failed due to the interest rate risk exposure at a time when market rates were increasing both in level and volatility.

Net Interest Margin (NIM) Data

  1. Visit the Uniform Bank Performance Report (UBPR) section of the FFIEC Web site (see link below).
  2. Click on Search for a Uniform Bank Performance Report. This brings you to a search engine where you can type in your Bank Holding Company’s name or FDIC number (such as Bank of America or BOA).
  3. Once the search generates a report link, click on it and then choose Standard Format, and then Generate Report.

This report provides all kinds of information on your chosen bank, including summary ratios of the bank and of its peer group. You should be able to find Net Interest Income (NII) as a percentage of Total Assets (TA). You may notice that sometimes Total Earning Assets (TEA) is used as a denominator instead of Total Assets (TA).

Analysis

Once you have obtained the data on Net Interest Margin (NIM), write an analysis discussing the interest rate sensitivity for your bank relative to the peer group based on the NIM across three time periods. Take the following questions into consideration:

  • What is revealed by the variation of the NIM across time?
  • What are some of the factors, economic or otherwise that have played a role in the bank’s interest rate sensitivity?

Inferences for the Industry

Based on the analysis of the interest rate risk for this company, and asset-liability management techniques, as covered in course readings and research, what strategies and recommendations can you offer for hedging against credit risk and interest rate risk? Provide support for your position from relevant sources.

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INTEREST RATE RISK ANALYSIS for Capital One Financial Corporation was first posted on February 18, 2021 at 11:35 am.
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