How a Leading Bank in Saudi Arabia Maximised its Return on Loans and Other Forms of Credit Through a Holistic Credit Control Solution

April 24, 2017

The Challenge

The client is a major bank operating in the Kingdom of Saudi Arabia who needed a holistic credit control solution that would measure the performance and risk characteristics of each individual customer. This would form the basis for an informed strategy to maximise its returns on loans and other forms of credit. By creating a system to generate detailed credit bureau data for each consumer, the bank would have a mechanism to increase limits on higher revenue generating accounts, decrease limits for higher risk customers, maintain a balanced portfolio based on informed decisions and significantly increase profits as a result.


The Qarar Approach

Through utilising the domain expertise of Qarar Consultants and Data Scientists, the client’s data was obtained to analyse various segments for both limit increases and decreases. This data was enhanced with and matched to Portfolio360, a solution from the Credit Bureau incorporating more than 200 credit bureau behaviour based measures and indices for each consumer. Utilising the combined data ensured that identified account level actions were driven through a holistic view of the consumer’s behaviour.  


The combined data was modelled utilising CHAID modelling techniques, coupled with the consultant’s business insights, to produce eligible segments for both:

  • Limit increases – Identifying high revenue and generating low risk, profitable consumers that had a high propensity to grow their balances though the usage of an incremental limit
  • Limit decreases – Identifying high risk consumers that were currently value eroding due to the level of credit loses and where current utilisation levels allowed  for a limit decrease to partially mitigate these losses


Once the segments were identified, the potential impact on profitability, for both limit increases and decreases was forecasted, utilising the various revenue / cost levers impacted through the changes in  limits. Examples of these levers include balance, revolve rate, utilisation, cost of funds, reserve coverage rates and provisioning. For credit line increases, incremental profitability and loss rates were also predicted.


Client Benefits

Limit increases

  • Improved spend & good, value generating balances
  • Mitigate dormancy & attrition on high revenue/profit generating accounts
  • Overall improvement in profitability
  • Results – An 84% increase in the number of qualifying accounts when compared to historic limit increase selection practices. This resulted in a combined incremental profit of $1.4M over a 12 month period through increasing limits by 30% whilst maintaining loss rates. Through utilising the Portfolio360 data, new segments, previously excluded, were able to qualify through a holistic view of consumer behaviour


Limit decreases

  • Reduction in average delinquent  and subsequent write-off balances
  • Improvement in per-account profitability through reduced write-offs
  • Mitigating risk by reducing exposure to potential high risk accounts
  • Results – As limit decreases was not previously conducted by the client, a conservative view was adopted to test the impact of consumer response to limit decreases. This conservative view lead to loss savings in excess of USD 100K over a 6 month period