Blog · Board and management reporting · Commercial banking
The ten relationship KPIs a commercial bank should run on, each with its formula, the export it comes from and what it tells you: products held against the sector norm, lending-only relationships, deposit flight, facility utilisation, share of wallet by product, relationship manager coverage at cadence, referrals between business lines, return per relationship, portfolio load against capacity, and primary bank indicators. Also the three measures most commercial banks miss, the figures to drop, the identities, and who owns what.
A commercial banking relationship is several products that should grow together. The measures that matter show which clients use only the balance sheet, whose operating balances are leaving, and whether the relationship managers have room to act on any of it.
| # | Measure | Formula | Export | What it tells you |
|---|---|---|---|---|
| 1 | Products held against sector norm | Products held ÷ median products held by clients of the same sector and size band | Product holdings file; client master | Relationships thinner than their peers |
| 2 | Lending-only relationships | Clients with credit exposure and no operating account, payments or fee products; exposure and return on each | Holdings file; facility file | Balance sheet used; fees earned elsewhere |
| 3 | Deposit flight | Average operating balance, last 3 months ÷ same months last year, per relationship; flagged below a stated ratio | Balance file | Cash management moving to another bank |
| 4 | Facility utilisation | Drawn ÷ committed, per facility, with trend | Facility file | Unused lines costing capital; clients drawing to the limit |
| 5 | Share of wallet by product | Bank's revenue from the client in the product ÷ estimated client spend on the product | Revenue file; estimates by source grade | Where the client's fee spend is going |
| 6 | Coverage at cadence, by revenue | Revenue of clients contacted within tier cadence ÷ total revenue | CRM; revenue file | Whether top relationships are being seen |
| 7 | Referrals between business lines | Referrals sent, accepted, converted, and revenue, by origin and destination | Referral log; revenue file | Whether one bank is working as one bank |
| 8 | Return per relationship | Revenue − cost of funds − expected loss − cost to serve, over capital used | Revenue, capital and cost files | Relationships that do not earn their capital |
| 9 | Portfolio load against capacity | Clients and required touches per relationship manager against available hours | CRM; client tiers | Portfolios too large to cover |
| 10 | Primary bank indicators | Share of client turnover seen through the account; payroll and tax payments present | Transaction file; client turnover | Whether the bank is the client's main bank |
Every one of these is computed per account, per relationship manager and team, and in total, and every one carries an identity that must hold before the table is shown.
Deposit flight. Balance reports are totals. The per-relationship trend against the client's own pattern is rarely produced.
Lending-only relationships. Credit approves the exposure; nobody lists the clients where exposure is all there is.
Portfolio load. Every analysis produces more clients to call. None checks whether the calendar can hold them.
A manufacturer has a $12 million term loan and a revolving facility, and nothing else. Similar clients hold five products. Its operating account is with another bank, along with payments, cards and foreign exchange, worth an estimated $140,000 a year in fees. The loan earns a return below the cost of capital. The relationship is reviewed annually by credit, and has never appeared on a sales list.
Products per customer as a bank-wide average. Meaningless without the sector and size norm.
Calls logged. Replace with revenue coverage at cadence.
Loan growth, alone. Growth in lending-only exposure lowers return.
| Table | Must hold |
|---|---|
| Holdings | Product revenue per client sums to the revenue ledger |
| Balances | Relationship balances sum to the general ledger deposit total |
| Referrals | Sent = accepted + declined + pending; accepted = converted + lost + open |
| Coverage | Clients = covered + uncovered; each with one owner |
A table whose identity fails is a table with a row missing or counted twice. It is not shown until it is fixed.
| Measure | Owner | Reviewed |
|---|---|---|
| Deposit flight; coverage at cadence | Team heads; relationship managers | Weekly to monthly |
| Lending-only; products against norm; referrals | Head of commercial banking | Monthly |
| Return per relationship; facility utilisation | Head of commercial banking with finance and credit | Quarterly |
| Portfolio load | Head of commercial banking | Twice a year, and on every reassignment |
A measure with no owner is a metric, not a KPI; see KPI versus metric versus measure.
Ten measures from the holdings, balance, facility and referral files. Deposit flight is the weekly signal; lending-only is the list with the most fee income in it. Covirage computes all of them from the exports commercial banks already produce, files only, with the definitions stated and the identities checked. See Covirage for commercial banks.
A sustained fall in a client's operating balances against its own history, not explained by seasonality or a known event. It usually means payments and collections are moving to another bank, which is the first step of moving the relationship. It shows in the balance file months before the facility is refinanced elsewhere.
Because the number that is good depends on the client. A logistics firm of a given size typically holds lending, payments, cards, foreign exchange and asset finance. One that holds only lending has four gaps. A property investor of the same size would be expected to hold fewer, and should not be marked down for it.
From the client's financial statements and disclosed facilities, from payment flows seen against turnover, and from what the client tells the relationship manager, each labelled by source. It is an estimate by product, and even a coarse one ranks where the fee income is going.