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Credit Risk


Use our advanced mathematical models to bring significant uplift in your credit decisions.

Find that sweet spot in credit lending

Make optimal credit decisions that yield profit increases in excess of 20%.

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Principa credit specialists can provide you with an understanding of the most profitable point at which to lend.

Using mathematical optimisation and industry knowledge, we’ll help you predict the optimal loan value that maximises profitability at minimal risk for each potential customer.

Traditional decision-making tools like risk scores, affordability models and policy rules are typically used independently within a credit decision.

Risk managers are beginning to appreciate that there are many sensitivities between the models and combining them all is a difficult prospect. There are a variety of decisions across the lifecycle that warrant a novel approach.

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The average ROI for a Principa-lead mathematical optimisation project is in excess of 500%

Improve profit of loans

Reduce capital expenditure cost by 60% – 70% by using our hosted solution

Lower overall cost of ownership – up to 50% lower cost than competing products

Leverage almost 20 years of IP in the South African credit market

Quick, easy and affordable to implement

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Principa optimisation ROI examples

South African Lender – 14% projected increase in profit per application with no increase in loss rate

South African Bank – 14% projected increase in profit per application with a 5% projected reduction in loss rate

South African Retailer – CLIs projected increased sales by R 90m for one year’s implementation, whilst marginally increasing risk

South African Retailer– account management strategy increased sales by R 60m over 12 months (almost 2.5% over the period) whilst also reducing risk slightly in a weakening credit environment

How Mathematical Optimisation Helped a South African Retailer Achieve Significant Lift Through Limit Increase Strategy

A large South African retailer looked to optimise their existing limit increase strategy. They approached Principa to introduce complex analytics and running the optimisation exercise.
Principa built component models that successfully incorporated advanced analytics into the retailer’s limit increase strategy. Within 9 months, sales increased by R87m. Bad debt and provisions were reduced by R11m in a weakening credit environment.
Our client’s response was to employ Principa to run future generations of CLI models and mathematical optimisation in other areas to further improve profits.

Find that profitable sweet spot
in credit lending

Maximise the profitability and minimise the risk of each one of your loans for new and existing accounts.
Contact us for more information and pricing on our mathematical optimisation for credit lending.


Optimisation Service offering

Principa brings mathematical optimisation to help businesses make better credit decisions with the following two offerings provided as a hosted solution that is integrated into your execution engine:

Full Custom Optimisation
We will build sensitivity (component) models on your historic data and then bring the models together into our mathematical optimisation algorithm where a huge range of scenarios are tested culminating in an optimal strategy.
Expert Optimisation
We utilise our expert sensitivity models and conduct the same mathematical optimisation algorithm to determine (ultimately) an optimal strategy.

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Optimisation answers questions such as:

What is the optimal initial credit line to offer an applicant to maximise profit without negatively impacting on bad debt or roll-ins into collections?

What is the optimal credit limit increase to offer an account to maximise the 12 month profitability without increasing risk and exposure?

When, and with which offer should I try to retain an existing good paying customer by offering an extension on their current credit line without impacting on the delinquency of my portfolio?

When, how and how often should I contact this delinquent account to reduce my bad debt and provision within the current operations capacity and without changing infrastructure?

How we do it

We take your book and will workshop to develop a strategy where we calculate exactly how much you should lend each individual.

We look at accounts and behaviour of previous year and decide on what would have been the optimal amount to have lent to each individual for maximum profit and then develop the models based on this for future applicants based on sensitivities such as affordability, down-selling, risk and early settlements.



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“Standard Bank is committed to improving our credit risk management throughout the Bank. Principa understands the South African banking industry and can offer us unique credit and risk expertise which we can use to achieve our strategic objectives.”

Standard Bank

Maximise Profitability, Minimise Risk

Find that profitable sweet spot in credit lending. Contact us for more information and pricing on our mathematical optimisation for credit lending.

Contact Us