ECONOMICS

Detailed explanation-1: -Funds Transfer Pricing (FTP) is a critical tool for accurately measuring a financial institution’s profitability. It enables you to measure and analyze net interest margin (NIM) for every segment (like products, customers/members, officers, and departments) of a financial institution.

Detailed explanation-2: -Fund transfer pricing (FTP) is a process used in banking to measure the performance of different business units of a bank.

Detailed explanation-3: -The funds’ transfer charges and credits are calculated based on the bank’s opportunity cost of borrowing at the time of origination. The value assigned to a deposit account would be equal to the difference between the cost of an equivalent term borrowing less the cost that is being paid on the instrument.

Detailed explanation-4: -FTP is a method used to measure how funding is contributing to overall profitability for a firm. Most global regulators have not incorporated FTP analysis into comprehensive bank regulatory reporting.