Ex 1.
Create a table of loan amortization in which:
- A person borrows money in 05 years
- The present value of the borrowing is $17,000
- The interest rate is 10% p.a
- The payment is at the end of the period
Loan amortization table
Beginning Periodic Ending
Year Principal Interest
balance Payment balance
(1) (2) (3) (4) (5)
1 17000 4484.3 2784.3 1700 14215.7
2 14215.7 4484.3 3062.73 1421.57 11152.97
3 11152.97 4484.3 … … …
4 … 4484.3 … … …
5 … 4484.3 … … …
(2) = Initial principal/PVIFA(5,10%) = 17000 / 3.791 = 4484,3
Tra hệ số PVIFA theo bảng PVIFA
(4) = (1) x r
(3) = (2) – (4)
(5) = (1) – (3)
Ex 2. Bank A has the following figures (unit: billion dong)
Asset Balance Interest Liabilities Balance Interest (%)
(%)
Cash 1220 Demand 3210 3
deposits
Deposits at 760 1,2 Short term 3970 13,5
the state savings
bank
Deposits at 2100 7,5 Medium- 1650 13,5
the other long term
banks savings
Governme 780 11,5 Short term 1240 13,2
nt borrowings
securities
Short term 2570 17,5 Medium- 620 17,1
loans long term
borrowings
Medium 2360 18,7 Equity 530
term loans
Long term 680 20
loans
Other 750
assets
Knowing that: income from services (fixed fee income) is 33 billion dong; income from
investment activities is 12 billion dong; expenses excluding the loan loss provision are 45 billion
dong; overdue debt proportion that is unable to collect the interest is 5%, income tax rate is 25%.
Category Proportion (out of total Collateral value
loan balance)
1 80% 2800
2 10% 380
3 3% 120
4 5% 90
5 2% 50
The balance of loan loss provision for last year was 171 billion dong.
1. Calculate weighted average interest cost
2. Calculate NIM (net interest margin)
3. Calculate the average loan rate so that ROE = 25%
Interest income = 760 x 1,2% + 2100 x 7,5% + 780 x 11,5% + 2570 x (1 – 5%) x 17,5% + 2360
x (1 – 5%) x 18,7% + 680 (1 – 5%) x 20% = 1232,0365 billion dong
Interest expenses = 3210 x 3% + 3970 x 13,5% + 1650 x 13,5% + 1240 x 13,2% + 620 x 17,1%
= 1124,7 billion dong
Interest Income – Interest Expenses = 107,3365 billion dong
Earning Assets = 760 + 2100 + 780 + 2570 + 2360 + 680 = 9250 billion dong
Net Interest Margin (NIM) = (Interest Income – Interest Expenses) / Average Earning
Assets = 1,16%
ROE = Earnings after tax/ Equity = 25%
Earnings after tax = 25% x Equity = 25% x 530 = 132,5 billion dong
EBT = 132,5/(1 – 25%) = 176,67 billion dong
Total outstanding debt = 2570 + 2360 + 680 = 5610 billion dong
Loan provisioning for category-1 debt = 0 billion dong
Loan provisioning for category-2 debt = (5610 x 10% – 380) 5% = 9,05 billion dong
Loan provisioning for category-3 debt = (5610 x 3% – 120) 20% = 9,66 billion dong
Loan provisioning for category-4 debt = (5610 x 5% – 90) 50% = 95,25 billion dong
Loan provisioning for category-5 debt = (5610 x 2% – 50) 100% = 62,2 billion dong
Total specific loan provisioning = 176,16 billion dong
Total general loan provisioning = 0.75% x (5610 – 5610 x 2%) = 41,2335 billion dong
Added loan loss reserves = Total specific loan provisioning + Total general loan provisioning –
outstanding loan loss provision for last year = 176.16 + 41.2335 – 171 = 46,3935 billion dong.
Assuming that the average loan rate so that ROE = 25% is Y%
EBT = (Interest income – Interest expenses) + other income – other expenses – added loan loss
reserves
⇨ Interest income = 176,67 + 46,3935 + 45 – 33 – 12 + 1124,7 = 1347,7635 billion dong = 760
x 1,2% + 2100 x 7,5% + 780 x 11,5% + 5610 x Y% (1 – 5%)
⇨ Y = 20,48%
