§4

Interest Rate & Default Sensitivity Modeling

Interactive scenario analysis examining portfolio profitability under varying interest rate environments, default stress levels, and cost assumptions. Adjust the parameters below to model different economic scenarios and observe the impact on product-level and portfolio-level margins.

Presets

Stress Scenarios

— click to apply
Scenario Controls

Adjust Parameters

+0.0%
-300bps+500bps
1.00x
0.5x (benign)3.0x (severe)
+0.0%
-200bps+400bps
1.00x
0.5x (efficient)2.0x (stressed)
Wtd. Net Margin3.41%+0% vs base
Net Income ($M)$1.44M+$0M
Base Margin3.41%reference
Products at Risk0 / 5all profitable
Figure 7

Stressed vs. Base Margins

Side-by-side comparison of base case and stressed net margins by product. Products turning negative under stress are highlighted in red. The chart updates in real-time as scenario parameters are adjusted.

PersonalAutoHELOCSMBStudent0%2%4%6%8%
  • Base Margin
  • Stressed Margin
Figure 8

Rate Sensitivity Curve

Portfolio-weighted net margin across a range of interest rate shifts. The breakeven point (where margin crosses zero) indicates the maximum rate decrease the portfolio can absorb before becoming unprofitable. Current scenario position is highlighted.

-3%-1%+1%+3%+5%0%3%6%9%12%Breakeven
Table 4

Detailed Stress Results

Complete stressed metrics for each product under the current scenario configuration. Red values indicate deterioration from base case.

ProductNIMDefaultExp. LossOpExNet MarginStatus
Personal
11.3%5.8%4.18%3.1%4.02%Viable
Auto
6.1%2.4%0.91%1.8%3.39%Viable
HELOC
4.7%1.2%0.3%1.2%3.2%Viable
SMB
8.3%4.6%2.53%2.9%2.87%Viable
Student
4.6%1.8%1.53%1.5%1.57%Viable

Analyst's Note: The sensitivity model demonstrates that Baokim's portfolio can withstand a +200bps rate increase while maintaining positive margins across all products. The primary vulnerability lies in the default rate multiplier — at 2.0x stress, student loans become the first product to turn unprofitable, followed by HELOCs. Personal loans, despite their higher absolute default rates, maintain profitability even under severe stress due to their premium pricing. This analysis supports the recommendation to maintain current product mix weightings while building additional loss reserves for the unsecured portfolio.

§4 Sensitivity ModelingBaokim Loan Profitability Analysis — FY 2022