This project investigates rising loan default rates for ABZ Limited, a micro-lending institution. I transformed raw lending data into a strategic tool to identify high-risk segments and provide data-backed recommendations to improve the quality of the company’s loan portfolio.
🛠️ The Analytical Approach
I managed the end-to-end data lifecycle to uncover hidden risks and drive smarter lending decisions:
◽ Data Transformation Cleaned and structured raw lending data using Power Query, ensuring accuracy in financial modeling by handling missing values and data inconsistencies.
◽ Feature Engineering (DAX) Developed custom KPIs and measures to segment the portfolio:
🔹 default_flag: Logic to isolate and analyze non-performing loans.
🔹 DTI Bucketing: Categorized Debt-to-Income ratios to identify over-leveraged borrowers.
🔹 Risk Tiers: Engineered groupings for interest rates and income levels to find correlations with default behavior.
◽ Strategic Visualization Designed an interactive dashboard to track:
📍 Loan Grade Performance (Grades A–G)
📍 Geographic Risk (State-by-State trends)
📍 Employment Length Impact on repayment
📍 Default Rate vs. Interest Rate Tiers
🚀 Key Insight: Breaking Assumptions
The analysis revealed a critical finding: mid-grade borrowers (Grades B, C, and D) had unexpectedly higher default rates compared to other segments. This discovery allowed the credit committee to move beyond assumptions and refine risk assessment for the "middle-market" segment.
✅ Actionable Recommendations
✔ Tighten Credit Policy: Recommended stricter requirements for borrowers in high-risk DTI ranges.
✔ Dynamic Pricing: Suggested adjusting interest rates for mid-grade loans to better reflect the discovered risk levels.
✔ Portfolio Monitoring: Established a real-time tracking system to identify regional default spikes early.
💻 Technical Stack
● Tool: Microsoft Power BI
● Engine: Power Query & DAX
● Domain: Credit Risk Analysis & Financial Business Intelligence
📂 Dashboard Navigation
Click on a section below to view the specific dashboard visualizations and insights:
◽ Actionable Insights & Recommendations
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