Performance Simulation Overview
The Performance Simulation section empowers credit unions to model, test, and compare the financial impact of strategic decisions before implementing them. It integrates seamlessly with ALM, budgeting, and capital markets modules to support forward-looking planning and risk management.
Financial Simulation
Models your institution’s financial performance under various growth, rate, and funding scenarios.
Key Benefits
- Supports budgeting and strategic planning with dynamic forecasts.
- Evaluates earnings, equity, and liquidity under different assumptions.
- Integrates with CECL and IRR to provide a comprehensive risk-adjusted view.
How to Use Financial Simulation
- Navigate to Performance Simulation > Financial Simulation
- Select or create a simulation scenario (e.g., base case, rate shock, growth plan)
- Input assumptions for loan growth, deposit behavior, rate environment, etc
- Run the simulation to generate reports on:
- Net interest income (NII)
- Economic value of equity (EVE)
- Liquidity and capital ratios
- Use the results to refine your budget or strategic plan
Performance Attribution
Decompose portfolio performance into its underlying drivers to understand what contributed to gains or losses. The model breaks down performance into two components -Market Movements: Changes in value due to interest rates, spreads, and curve shifts and Transactions: Trades and portfolio adjustments made during the period. Each component is further decomposed into specific value drivers such as duration, convexity, and option cost
Key Benefits
- Supports model and market risk management.
- Enables recursive back testing for regulatory compliance.
- Provides a feedback loop for ALCO and portfolio managers to refine strategies.
- Enhances transparency and auditability for board and regulatory reporting.
How to Use Performance Attribution
- Navigate to Performance Simulation > Performance Attribution
- Select the portfolio and time horizon
- Run the analysis to view:
- Total return breakdown
- Attribution by market factors and transactions
- Risk-adjusted performance metrics
