Chapter 2

A bank has financial statements with following information: (Unit: billion dong)
Ave
Average rage
Asset interest Liability inte
rate rest
rate
Cash on hand, gold, silver and Amounts due to the
2.10
gemstones (Cash and cash 54,678 0% Government and the State 128,538
%
equivalents) Banks
Balances at central banks and Deposits from other credit
7,890 3% 41,853
other credit institutions institutions
Financial investment (Trading
0.20
securities & Investment 124,670 5.10% Demand deposits 38,977
%
securities)
1.60
Short-term loans 366,835 8.20% Term Deposits, <12T 2,807
%
4.50
Medium & long-term loans 166,280 9.70% Term Deposits, >12T 69
%
Borrowings from other 1.50
Fix assets & other assets 46,095 0% 8,355
credit institutions %
Deposits from customers 531,389
0.20
Demand deposits 158,966
%
4.30
Term Deposits, <12T 228,497
%
7.30
Term Deposits, >12T 143,926
%
5.90
Valuable papers issued 3,661
%
Other liabilities 1,557
0.00
Shareholder equity 51,095
%
Total assets 766448 Total liabilities 766,448
Known:
Net Fee and commission income 3,610
Net gain from trading of foreign currencies 3,250
Net gain from trading securities and investment
728
securities
Net other income 1,279
Operating expenses 18,590
Allowance for credit loss 7,199
Require:
Brieftly comment on the bank’s profitability, given that corporate income tax:
20%
52804.500
interest expense 23816.494
Net after tax 9652.8048
0.01259420
ROA 7
0.18891877
ROE 5

Exercise 2. A commercial bank announces the deposit rates as following:

1. Current account (0.75% annually)

2. Savings account (2.75 % annually)
3. CDs (3.7% annually)

a/ A customer would like to deposit $15,000 to this bank for 12 months. Calculate the interest
payments this customer would receive the three types of deposits. Give a short comment on the
results.

b/ The client decides to open a savings account for 9 months with $10.000, but then withdraws
the money after 6 months. The bank interest policy is that any pre mature withdrawal receives
current account interest rates. How much money would he receive for full term anđ after 6
months? Comment on the results.

Exercise 3: The X joint-stock commercial bank is currently offering the following deposit
rates:

- Interest rate for demand deposits: 0.2 % per year.

- Interest rate for term deposits: 6-month term (unit: % per year)

Monthly At maturity
At the counter 6.5% 6.6%
Online 6.5% 6.65%

A customer has a deposit at the X joint-stock commercial bank with following information:

 Deposit amount: 100 million dong.

 Deposit maturity: from 10/3/2022 to 10/9/2022

1. Calculate the interest payment to the customer in two cases, making deposit at the counter
and via an online channel:
  Interest paid at the end of the period (at the maturity)
 Interest paid monthly
 The customer withdraws all her deposit on 20/5/2022 to buy a car

2. Comment on the amount of interest customer receives in the different cases.

Exercise 4.
Customer Minh Tung applies for a bank loan to buy a 2 billion dong car. The bank agrees to
finance 75% of the value of the car, with the following terms:
- Loan maturity: 3 years
- Lending rate: 16%/year
- Repayment schedule: semi-annually.
- Payment method: installment, interest payment for each period is calculated based on the
actual outstanding balance at the beginning of the repayment period.
Require: 
1. Prepare a spreadsheet of the principal and interest repayments for each period.
2. In order to finance the above loan, how much deposit must the bank has to raise, given that
the required reserve ratio and the solvency reserve ratio are 5% and 3% respectively for a
deposit of 3-year term. Interest expense is 3.5%/year and non-interest expense is 1%/year.
How much is the total profit the bank earned when making the above loan.
Exercise 5:
Commercial Bank A provides a loan to a customer to buy a car with the following terms:
- Loan amount: 1000 million VND
- Loan maturity: 2 years
- Lending rate: 12%/year
- Repayment period: Quarterly
- Payment method: Equal installments for the principal amount and interest payment is
calculated based on the loan balance at the beginning of the repayment period.
Require:
1, Make a spreadsheet of the principal and interest repayments for the loan. How much is the
total interest income of the bank from the loan.
2, Suppose that the customer requests to repay the loan early at the end of the first year. Given
that the prepayment fee is 2% of the prepayment amount, how much does the customer have to
pay to terminate the loan upon his request.
Exercise 6
The ABC Bank makes a loan commitment to company Y, which specializes in importing
electronic components, with a credit line of USD 20,000 for 6 months with the following fees:
 - Commitment fee: expressed as a percentage of the total commitment: 2%
- Usage fee: levied on the unused portion of the credit line: 2.5%.
- Servicing fee: as a percentage of the on the borrowed amount: 0.75%
- The borrower must opens a current account and the deposit balance at the bank equal
10% of credit line during the commitment period.
During the commitment period, the firm withdrew 5,000 USD with a term of 6 months, the
interest rate is 8%/year. Calculate the net profit of the commercial bank assuming that the
average business interest rate of the bank is 5% and the deposit rate on current account is 0.5%
and the average cost related to loan commitment is 3% of the credit line.
Exercise 7
ABC Bank signs an irrevocable L/C contract with customer Y with the following terms:
- L/C value is 100,000 USD
- Customer deposits 80% of L/C value on the current account at the time of signing
- Foreign currency swap fee 0.05% of the total value of L/C-
- L/C issuance fee is 2% of the total value of L/C
At the time the Bank makes the payment to the counterparty, customer Y commits to allow the
Bank to automatically debits the checking account and takes a loan with the residual amount at
the interest rate specified by the Bank.
1 month after the L/C was signed, the counterparty of Y presented the required documents and
the bank processes with the payment
Bank's current interest rate on demand-deposit is 0.06%/year. Calculate the income for the
bank for the L/C in the following 2 cases:
a. Customer Y pays immediately to the bank when their counterparty presented the
shipping documents
b. Customer Y pays after 2 months from the date the Bank made the payment. Knowing
that the lending rate for the deferred payment is 6%/year
n the bank performance