In a typical first round of eight, two or three candidates will still open a bank case with a retail profit tree and talk about "units sold." The interviewer is not testing whether you can list products. They are listening for whether you diagnose the bank with the five numbers that actually move the sheet: net interest margin, deposit beta, cost-to-income, cost of risk, and CET1.
This is a consulting case where the client is a bank — not an investment-banking job interview. Treat the firm like any other strategy client, but reason from call-report economics. After this piece you should spot a funding or branch prompt in the first thirty seconds, run a clean deposit-beta calculation, and close with a capital-aware recommendation.
What the scoring sheet rewards
Bank cases are ordinary cases with an inverted balance sheet. Loans are assets. Deposits are liabilities. Profit is mostly the spread between what the bank earns on assets and what it pays on funding, minus operating costs and credit losses, subject to a capital floor.
When I score these, three moves separate a pass from a polite no:
- You name the profit engine as net interest income, not "revenue from loans."
- You ask whether the problem is price (rates), volume (balances), mix (deposits vs wholesale funding), cost-to-serve, or credit — before you invent initiatives.
- You check capital. "Grow the loan book" without CET1 headroom is a junior answer.
Fee income, wealth, and cards matter, but they are usually second-order on a retail or regional bank case. Lead with the spread and the cost of funding it.
The five ratios interviewers expect you to use
You do not need a CFA. You need fluency with the metrics that appear in bank 10-Ks, FDIC call-report aggregates, and Basel rules.
| Ratio | What it is | Why it shows up in cases |
|---|---|---|
| Net interest margin (NIM) | Net interest income / average interest-earning assets | The efficiency of the spread engine |
| Deposit beta | Change in deposit rates / change in the policy rate | How fast funding costs catch asset yields |
| Cost-to-income (efficiency) | Operating expense / operating income | Branch densification and digital leverage |
| Cost of risk | Provisions or net charge-offs / average loans | Credit quality; growth that ignores it fails |
| CET1 | Common Equity Tier 1 / risk-weighted assets | The hard constraint on balance-sheet growth |
Industry anchors help you sanity-check invented case numbers. As of full-year 2024, FDIC-insured institutions ran a net interest margin of 3.22 percent and an efficiency ratio of about 57 percent. Net charge-offs to loans sat near 0.68 percent that year — a rough industry proxy for cost of risk when the case does not give provisions. Under Basel III, CET1 must be at least 4.5 percent of RWA, plus a 2.5 percent capital conservation buffer, so most interviewers treat roughly 7 percent as the practical floor before distribution constraints kick in. Large banks run well above that; JPMorgan Chase reported a 15.7 percent CET1 ratio at year-end 2024.
Deposit beta is the ratio candidates forget and then lose the case on. The Fed's March 2024 Senior Financial Officer Survey found average cumulative retail deposit betas of about 40 percent from March 2022 to March 2024 (a 525 bp funds-rate rise), with wholesale non-operational deposits near 77 percent. If the case says rates rose 400 bp and the bank's deposit cost rose only 80 bp, say "beta of 20 percent" out loud. That is the diagnosis.
How to open without sounding like a textbook
Clarify three things, then structure. Skip the twenty-minute glossary.
- Is this a retail, commercial, or universal bank? Product mix changes which ratio bites first.
- Are we diagnosing a P&L miss, a funding squeeze, a branch network decision, or a growth plan?
- What is the capital position and the regulatory perimeter (US call-report bank vs European CET1 reporting)?
Then put a short tree on the page:
Pre-tax profit ≈ NII + fees − operating expense − provisions
With NII = (earning-asset yield × assets) − (funding cost × funding). Funding cost is where deposit beta lives. Operating expense is where cost-to-income lives. Provisions are cost of risk. Any recommendation that grows assets must clear CET1.
That is enough structure. Do not recite Basel chapter and verse unless the prompt is capital.
Worked mini-case: Harborline's branch cull and deposit price
Prompt. Harborline Community Bank is a mid-sized US regional with $40 billion in assets. Pretax profit fell from $420 million to $340 million last year. Management wants to close 40 of 220 branches and raise rates on its online high-yield savings product to stop deposit runoff. Should they?
All figures below are invented for the case but kept internally consistent. Use them as a template, not as industry fact.
Starting P&L (illustrative)
| Line | Amount |
|---|---|
| Average interest-earning assets | $36.0B |
| Net interest income | $1,080M |
| Fee income | $220M |
| Operating expense | $780M |
| Provisions (cost of risk) | $180M |
| Pretax profit | $340M |
Implied NIM = 1,080 / 36,000 = 3.00%. Cost-to-income = 780 / (1,080 + 220) = 60%. Cost of risk = 180 / 32,000 average loans ≈ 56 bp. CET1 is given as 11.2% on $28B RWA, so CET1 capital ≈ $3.14B — comfortable above a 7% practical floor.
Deposit beta diagnosis
Policy rates rose 400 bp over two years. Harborline's average deposit cost rose from 0.40% to 1.60% — a 120 bp rise. Deposit beta = 120 / 400 = 30%. Peer regionals in the case packet sit at 45%. Harborline under-paid for deposits, lost $2.0B of balances to online competitors, and replaced half of that with wholesale funding at 4.8%. That mix shift, not loan yields, explains most of the NII miss.
Quick check: $1.0B of cheap deposits replaced with wholesale funding at a 320 bp spread disadvantage costs about $32M of NII per year. That alone is 40% of the $80M pretax decline.
Option A — close 40 branches
Each closed branch saves $1.1M of annual run-rate cost (rent, staff, cash handling) after a one-time $0.4M exit cost. Forty branches save $44M per year. Assume 8% of those branches' depositors leave and take $600M of deposits with them; replacing that funding at wholesale rates costs another $19M of NII. Net annual benefit ≈ $44M − $19M = $25M, and cost-to-income falls toward 57% if revenue holds.
Option B — raise online savings rates
Raise the online savings rate by 80 bp on a $5.0B balance that currently pays 2.0%. Extra interest expense = 5,000 × 0.80% = $40M. Management believes this stops further runoff and wins back $800M of deposits from competitors within a year, displacing wholesale funding that costs 4.8%. Funding-cost save on the $800M = 800 × (4.8% − 2.8%) = $16M. Net year-one cost of the rate hike ≈ $40M − $16M = $24M, with better stickiness thereafter if beta normalizes toward peers.
Recommendation
Do both, sequenced. Close the 40 branches for the $25M structural cost save, and raise online rates only on the competitive savings bucket — not on sticky checking — so the beta increase is targeted. Combined year-one effect is roughly +$1M pretax with a cleaner cost-to-income and a denser deposit franchise; by year two the funding mix save compounds and pretax should clear $370M if cost of risk stays near 56 bp. Do not grow the loan book until CET1 and deposit quality stabilize. Harborline already has capital; it does not have cheap funding.
Ned's rule. If you cannot say which of NIM, deposit beta, cost-to-income, cost of risk, or CET1 is the broken dial, you are not ready to recommend anything. Name the dial first, then the lever.
Where candidates leak points
- Treating deposits as "customers" instead of funding. Volume growth that requires wholesale money can shrink NIM even as balances rise.
- Ignoring beta when rates move. A 50% beta on a 300 bp hike is 150 bp of funding cost; that is often the entire case.
- Cutting compliance or risk spend to "improve" cost-to-income. Interviewers hear that as regulatory naivety.
- Proposing loan growth without RWA and CET1. Capital is not a footnote.
- Confusing this brief with sell-side IB recruiting. Pitch books and comps are the wrong toolkit here.
Insurance and asset-management cases share the "financial services" label but different economics; use the financial services case interview guide when the client is not a deposit-funded bank.
Practice this on a live P&L
Write Harborline's five ratios from memory, then run one timed profitability case and force yourself to diagnose funding before costs. The free first rep at /start takes about five minutes and scores structure and math without an account. For a full voice case with a debrief, use /interview. Everything on CoachNed is open for seven days with no card; then $120 for a recruiting season or $49 a month.
Frequently asked questions
What is a banking case interview in consulting?
It is a standard case interview where the client is a bank or banking business — retail, commercial, or universal. You still clarify, structure, analyze, and recommend. The difference is the inverted balance sheet and the ratios above.
Which ratios should I memorize for a bank case?
NIM, deposit beta, cost-to-income (efficiency), cost of risk (provisions or charge-offs over loans), and CET1. Add ROE if the prompt is investor returns. That set covers most first- and second-round banking cases.
How is a banking case different from an investment banking interview?
A banking case is about running or advising a bank as a business. An IB interview is about deals, valuation, and technical accounting. Do not bring LBO mechanics into a retail NIM decline unless the prompt asks for them.
Do MBB and Big Four still ask banking cases?
Yes, especially for financial-services practice interviews and for candidates who claim banking experience. Oliver Wyman and specialist FS boutiques lean even harder on them. Firms publish little about current case content; treat detailed "firm X always asks Y" lists as folklore unless the firm's own careers page says otherwise.
How do I practice bank math without a real 10-K?
Rebuild Harborline from the table above, then stress NIM by ±20 bp and beta by ±10 percentage points. When you want scored reps, use /drills/math and full cases at /consulting-cases.
Sources
- FDIC Quarterly 2025 Vol. 19 No. 1 — full-year 2024 industry NIM of 3.22% and related call-report aggregates. Checked 2026-09-24.
- FDIC Quarterly Banking Profile, Fourth Quarter 2024 — industry efficiency ratio near 57% and net charge-off context. Checked 2026-09-24.
- BIS Basel Framework RBC20 — minimum risk-based capital — CET1 minimum of 4.5% of RWA. Checked 2026-09-24.
- BIS buffers above the regulatory minimum (RBC30) — 2.5% CET1 capital conservation buffer. Checked 2026-09-24.
- Federal Reserve March 2024 Senior Financial Officer Survey — cumulative retail and wholesale deposit betas through March 2024. Checked 2026-09-24.
- JPMorgan Chase 2024 MD&A financial highlights — year-end 2024 CET1 of 15.7% as a large-bank reference point. Checked 2026-09-24.
CoachNed is independent and is not affiliated with McKinsey, BCG, Bain, Deloitte, or any bank named for illustration.