Modeling a bank’s loan portfolio
I have just been asked by the MD to model out the loan portfolio of a target bank (that we are looking to acquire) and stress test the portfolio. I've never done This before and Don't have a junior to consult. Can someone whose invested in banks: 1) please walk me through how can I determine loan growth rates for the different types of banks, and 2)how should I go about stress testing the portfolio it to see how many NPLs will come about / losses / what provision for risk losses should we be underwriting?
Bank operates in retail, credit card, mortgages and commercial segments. I found some approaches that project total loans outstanding in the country as % of its GDP and multiply that by bank's market share. But that seems stupid and too simplistic in this approach. Any ideas?? Thanks so much in advance