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3(b)

b) The Prime Bank Limited (PBL) is considering of granting a lk 10 milion line of credit for nine months to Ary Food and Beverage Company. As a credit officer of PBL-Dhanmondi Branch, you are expecting that Abis will use the full line of credit maintaining a minimum balance of 20% on the credit line. Also remember that. Akis is a prime customer for your bank and you are responsible to maintain a good customer relationship with the company Now, you have to decide whether to grant the credit line to Aks or resect the loan proposal. Note. There is in implication of legal reserves which is currently 50x recently set by Bangladesh Bank it should be considered in two cases while calculating the interest Paid on customer's deposit and while calculating the bank's net investable funds. Applying customer profitability analysis (CPA) and using the most recent year as a guide your forecast reflects the following sources of revenues and expenses Sources of Revenues Interest income from Loan (15%) Loan commitment fees (1%)... Deposit Management fees... Tk 50.000 Loan processing fees (0.75%) Tuttan fer fee 105 . 23 Agency services fees.... Tk. 80,000 100 Sources of Costs: Interest paid on customer's deposit (9%). Cost of Funds (12%). Activity costs .Tk. 7,000 Cost of fund transfers (0.25%... Cost of loan processing (0.75%)... Record keeping costs Tk. 3,000 Questions for Analysis a) What is the expected net rate of return from this proposed loan application if the customer actually draws down the full amount of the requested line for nine months? b) What decision should the bank make under the foregoing assumptions? c) if you decide to turn down the this request, under what assumptions regarding revenues, expenses and customer deposit balances would you be willing to make this loan? Glory to the winners, Cheers! a) How prime method is different from Times.prime method? What prediction does it reveal to bank when a client prefers prime method over times prime? b) The Prime Bank Limited (PBLis considering of granting a Tk. 10 milion line of credit for e months to Akiy Food and Beverage Company. As a credit officer of PBLDhanmondi Branch, you are expecting that Aki will use the full line of credit maintaining a minimum balance of 20% on the credit line Also remember that. Akijis a prime customer for your bank and you are responsible to maintain a good customer relationship with the company. Now, you have to decide whether to grant the credit line to Akij or reject the loan proposal. Note: There is in implication of legal reserves which is currently s.Ox recently set by Bangladesh Bank. It should be considered in two cases while calculating the interest and on customer's deposit and while calculating the bank's net investable funds. Applying customer profitability analysis (CPA) and using the most recent year as a guide your forecast reflects the following sources of revenues and expenses: Tk. 50.000 Sources of Revenues Interest income from Loan (15%). Loan commitment fees (19) Deposit Management fees Loan processing fees (0.75%). Fund transfer fees (OSN): Agency services fees. . Tk. 80.000 Sources of Costs Interest paid on customer's deposit (9%). Cost of Funds (12%) Activity costs Cost of fund transfers (0.25%). Cost of loan processing (0.75%). Record keeping costs Tk. 7,000 Tk. 3,000 Questions for Analysis: a) What is the expected net rate of return from this proposed loan application if the customer actually draws down the full amount of the requested line for nine months? b) What decision should the bank make under the foregoing assumptions? d if you decide to turn down the this request, under what assumptions regarding revenues, expenses and customer deposit balances would you be willing to make this loan? Glory to the winners, Cheers! - you The prime Bank Ltd. considering of granting a The 1smitien lene of oudi fit 9 months to auff 1. As a credit officer od PBL, you are expecting that Akij will use the Siell line of credit rasitaining a minimum bulance of may on the attadil tone. Ako rememben that. Akij s a prime ostaware for youne znakand you are reponsible to maintain a have to decide whether to grant good customer relationship with the comport the credit line to akijare rajee the loan preporal (Note: There an inplication of legal recentes which is currently 5%. rucently set by Bangladesh Bank. St should be considered in two cases while makahing the interest paid on estorrents deposit and while calculating the book met imestadlo . Aund) Applying customert profitability analysis and using the most recent yeart as a guide, your facecast readuats the Following Sotins of revenues and expenses: Soutens drevens: Interest income for Laan (15) lom Cervitent fees (ay) Deposit management fees 50, TK Processing fees (0.751) fund tharssen feos (0.5%) geray services ftes SOOTH Soutcois of osts: trertest paid on eustomer's deposit (04) cost of funds (127) 7000 75 Aativity casts Googt at ford trampfers (0.257) est at land possessing (0.1751.) Record keeping eest; orm Requiremento: What is the expected net rate of treturen from this proposed Loan application of the customer actually draws down the full amount of the requested line fure 9 months Laan 360p R b) The Prime Bank Limited (PBL) is considering of granting a lk 10 milion line of credit for nine months to Ary Food and Beverage Company. As a credit officer of PBL-Dhanmondi Branch, you are expecting that Abis will use the full line of credit maintaining a minimum balance of 20% on the credit line. Also remember that. Akis is a prime customer for your bank and you are responsible to maintain a good customer relationship with the company Now, you have to decide whether to grant the credit line to Aks or resect the loan proposal. Note. There is in implication of legal reserves which is currently 50x recently set by Bangladesh Bank it should be considered in two cases while calculating the interest Paid on customer's deposit and while calculating the bank's net investable funds. Applying customer profitability analysis (CPA) and using the most recent year as a guide your forecast reflects the following sources of revenues and expenses Sources of Revenues Interest income from Loan (15%) Loan commitment fees (1%)... Deposit Management fees... Tk 50.000 Loan processing fees (0.75%) Tuttan fer fee 105 . 23 Agency services fees.... Tk. 80,000 100 Sources of Costs: Interest paid on customer's deposit (9%). Cost of Funds (12%). Activity costs .Tk. 7,000 Cost of fund transfers (0.25%... Cost of loan processing (0.75%)... Record keeping costs Tk. 3,000 Questions for Analysis a) What is the expected net rate of return from this proposed loan application if the customer actually draws down the full amount of the requested line for nine months? b) What decision should the bank make under the foregoing assumptions? c) if you decide to turn down the this request, under what assumptions regarding revenues, expenses and customer deposit balances would you be willing to make this loan? Glory to the winners, Cheers! a) How prime method is different from Times.prime method? What prediction does it reveal to bank when a client prefers prime method over times prime? b) The Prime Bank Limited (PBLis considering of granting a Tk. 10 milion line of credit for e months to Akiy Food and Beverage Company. As a credit officer of PBLDhanmondi Branch, you are expecting that Aki will use the full line of credit maintaining a minimum balance of 20% on the credit line Also remember that. Akijis a prime customer for your bank and you are responsible to maintain a good customer relationship with the company. Now, you have to decide whether to grant the credit line to Akij or reject the loan proposal. Note: There is in implication of legal reserves which is currently s.Ox recently set by Bangladesh Bank. It should be considered in two cases while calculating the interest and on customer's deposit and while calculating the bank's net investable funds. Applying customer profitability analysis (CPA) and using the most recent year as a guide your forecast reflects the following sources of revenues and expenses: Tk. 50.000 Sources of Revenues Interest income from Loan (15%). Loan commitment fees (19) Deposit Management fees Loan processing fees (0.75%). Fund transfer fees (OSN): Agency services fees. . Tk. 80.000 Sources of Costs Interest paid on customer's deposit (9%). Cost of Funds (12%) Activity costs Cost of fund transfers (0.25%). Cost of loan processing (0.75%). Record keeping costs Tk. 7,000 Tk. 3,000 Questions for Analysis: a) What is the expected net rate of return from this proposed loan application if the customer actually draws down the full amount of the requested line for nine months? b) What decision should the bank make under the foregoing assumptions? d if you decide to turn down the this request, under what assumptions regarding revenues, expenses and customer deposit balances would you be willing to make this loan? Glory to the winners, Cheers! - you The prime Bank Ltd. considering of granting a The 1smitien lene of oudi fit 9 months to auff 1. As a credit officer od PBL, you are expecting that Akij will use the Siell line of credit rasitaining a minimum bulance of may on the attadil tone. Ako rememben that. Akij s a prime ostaware for youne znakand you are reponsible to maintain a have to decide whether to grant good customer relationship with the comport the credit line to akijare rajee the loan preporal (Note: There an inplication of legal recentes which is currently 5%. rucently set by Bangladesh Bank. St should be considered in two cases while makahing the interest paid on estorrents deposit and while calculating the book met imestadlo . Aund) Applying customert profitability analysis and using the most recent yeart as a guide, your facecast readuats the Following Sotins of revenues and expenses: Soutens drevens: Interest income for Laan (15) lom Cervitent fees (ay) Deposit management fees 50, TK Processing fees (0.751) fund tharssen feos (0.5%) geray services ftes SOOTH Soutcois of osts: trertest paid on eustomer's deposit (04) cost of funds (127) 7000 75 Aativity casts Googt at ford trampfers (0.257) est at land possessing (0.1751.) Record keeping eest; orm Requiremento: What is the expected net rate of treturen from this proposed Loan application of the customer actually draws down the full amount of the requested line fure 9 months Laan 360p R

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