In a competitive market, it is vital that banks understand how customers and market sectors contribute towards profitability, and to what extent relationships with particular customers are profitable.

Equation’s standard profitability analysis tools are:
• Income Analysis, which allows the bank to enquire and report on income from a range of transactions with a selected customer
• Transfer Pricing, which automatically applies benchmark rates to individual assets, liabilities and foreign exchange deals. The difference between these rates and the contractual rates identifies the profit contribution per transaction.

With Income Analysis, the bank can set up its own product categories and income can be analysed into interest, charges, commissions and FX-related profit. Users can compare information across time periods, helping them to spot trends at a high level, and drill down to the underlying transactions. Transfer Pricing provides comparative pricing data associated with daily banking activities. Reference rates are set for bank-defined pools of assets, liabilities and foreign exchange deals. Banks can therefore set internal lending and borrowing rates to all accounts and internal exchange rates for use in FX deals.

Equation provides an optional module – Webform – to provide more sophisticated analysis and reporting capabilities. With the module, users can manipulate data extracted from Equation reports, import data from other systems and create their own reports to address specific requirements. The analyser component automates the comparison of Equation financial reports against budgets / forecasts and provides flexible cost allocation functionality. The profitability component automates the extraction of profitability statistics to facilitate income and expense analysis against budgets.