Bank Analysis School - September 2023

Internal Use Only

Cash Flow Projections

“Static balance sheet measures [e.g. ratios] may not reveal significant liquidity risk…and generally should not be the sole measures used to monitor and manage liquidity.”

“The process of measuring liquidity risk should include robust methods for comprehensively projecting cash flows arising from assets, liabilities, and off-balance sheet items over an appropriate set of time horizons.”

Link: Cash Flow Example Layout

Internal Use Only

Liquidity Stress Testing – Example Scenarios

Base Case

Moderate Stress

High Stress

• Expected cash flows.

• Higher than

• Moderate stress from cash outflows plus borrowing lines terminated and use of brokered deposits restricted.

expected cash outflows (e.g. loan growth and/or deposit runoff.)