Skill 03 · Check the numbers yourself
Which portfolio holds the most bad loans, and what should the review do about it?
Interviewers hand you a chart and wait. They are testing the basics: units, scale, what the chart is really showing, and the so-what.
The question
A regional bank’s chief risk officer is preparing for a credit review. She wants to know where the risk in the loan book sits.
Bank loan book by portfolio and risk grade
FY2024 balances, $B; column width is the portfolio balance
Synthetic data for practice. Balances exclude undrawn commitments.
| Portfolio | Balance | Prime | Near-prime | Subprime | Nonperforming |
|---|---|---|---|---|---|
| Consumer | $2.63B | 50% | 28% | 17% | 5% |
| Small business | $2.07B | 45% | 30% | 15% | 10% |
| Commercial | $2.82B | 60% | 25% | 10% | 5% |
| Real estate | $1.88B | 70% | 20% | 5% | 5% |
“Which portfolio holds the most nonperforming dollars, and what does that mean for the review?”
2 min Think first. Jot down your answer, or say it out loud, before you open the steps. The steps make far more sense once you’ve tried it yourself.
A strong answer, step by step
Open each step in turn. This is our worked answer, not the only good one.
Step 1: Read the chart before the answer
“Columns are portfolios, and their width is the loan balance. Segments are risk grades. The total book is $9.4B.”
Why it works: Saying the axes out loud catches the most common mistake on a Marimekko. Dollars are area, not height.
Step 2: Do the multiplication
“Small business has the highest nonperforming rate at 10%, on $2.07B of loans, so about $0.21B. Commercial is next at about $0.14B, despite its lower rate.”
Why it works: Width × height turns a rate into dollars. The tallest bar is only the answer when the columns are the same width.
Step 3: Say the so-what
“Small business is 22% of the book but 36% of the $0.57B of bad loans. That’s where the review should start.”
Why it works: A share comparison makes the point in one sentence. It shows the risk is concentrated, not just high.
Step 4: Give the next step
“I’d cut small-business nonperforming loans by vintage and industry, and check whether reserves cover them.”
Why it works: Interviewers reward a next analysis that would change what the client does. It shows you know a chart is the start of the work, not the end.
Common traps
- Comparing heights and ignoring widths.
- Averaging the column percentages instead of weighting them by balance.
- Reading the % axis as dollars.