Exercise 1.

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.

1. 15 000 x 0.75% = 112.5

2. 412.5
3. 555,

CDs > Saving accounts > Current accounts

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.

Full term: = 10.000 x ¾ x 2.75% + 10.000 = 10206.25

After 6 months: = 10.000 x ½ x 0.75% + 10.000 = 10037.5

Exercise 2: 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) 184 ngày
 Interest paid monthly

2. Suppose that the customer withdraws all her deposit on 20/5/2022 to buy a car. Calculate the
interest payment to the customer. Comment on the amount of interest customer receives in the
different cases. 71 ngày

At maturity Monthly 20/5

At the counter 3.3 0.542 0.099
Online 3.325 0.546 0.099

Exercise 3.
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.

Đợt trả Phải trả gốc Phải trả lãi Gốc + Lãi Dư nợ
Đầu 1500 million
Đợt 1 250 1500 x 8% = 120 370 1250
Đợt 2 250 1250 x 8% = 100 350 1000
Đợt 3 250 1000 x 8% = 80 330 750
Đợt 4 250 750 x 8% = 60 310 500
Đợt 5 250 40 290 250
Đợt 6 250 20 270 0
Tổng 1500 420 1920

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 4:
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.

Đợt trả Phải trả gốc Phải trả lãi Gốc + Lãi Dư nợ
Đầu 1000
Đợt 1 125 1000 x 3% = 30 155 875
Đợt 2 125 875 x 3% = 26.25 151.25 750
Đợt 3 125 750 x 3% = 22.5 147.5 625
Đợt 4 125 625 x 3% = 18.75 143.75 500
Đợt 5 125 15 140 375
Đợt 6 125 11.25 136.25 250
Đợt 7 125 7.5 132.5 125
Đợt 8 125 3.75 128.75 0
Tổng 1000 135 1135

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 5
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.
Income:
- Commitment fee: 2% x 20.000 = 400 USD
- Usage fee: (20.000 – 5.000) x 2.5% = 375 USD
- Servicing fee: 5.000 x 0.75% = 37.5 USD
- Average business interest: 5% x (10% x 20.000) *6/12 = 50 USD
- Profit from loans: 5.000 * 8% * 6/12 = 200 USD
Expense:
- Deposit expense on current account 0.5% x (10% x 20.000) *6/12 = 5 USD
- Average cost related to loan commitment: 3% * 20.000 = 600 USD
Net profit= Income – Expense = 457.5 USD

Exercise 6
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
- Foreign currency swap fee: 0,05% x 100.000 = 50 USD
- L/C issuance fee: 2% x 100.000 = 2000 USD
- Interest profit on demand-deposit = 80% x 100.000 x 0.06%*1/12 = 4 USD
Total income: 2046 USD
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
- Amount have to pay: 20% x 100.000 = 50.000 USD
- Profit from deferred payment: 50.000 x 6% * 2/12 = 500 USD
Total income: 2046 + 500 = 2.546 USD

Exercise 7: The following table presents a simplified balance sheet of the ABC bank:
Bank ABC BALANCE SHEET (Unit: mil VND)
ASSET LIABILITIES AND EQUITIES
Cash Deposits and borrowings from
27 500 other credit institutions 100 100
Securities 86 000 Customer's deposits 250 500
Loans ???? Issuance of valuable papers 34 200
Loan loss provision -1500 Equity 19300
Fixed assets and other properties 19 100
Total Assets 404,100 Total liabilities and equities 404 100

1. Calculate the total loan volume to customers of this bank. Comment on the proportion
of loans over total assets of the bank.
Loans = 273.000 = 67.55%
2. Calculate ROE, ROA and bank leverage ratio, given the following assumptions: Interest
revenue: VND 3,850mil, interest expense: VND 1,725mil, non-interest revenue:
VND1,500mil, non-interest expense: VND 607.5mil, allowance for loan loss is VND
336mil; tax rate: 10%
Net income after tax= Revenue – Expense – allowance = (3850 – 1725 + 1500 – 607.5 –
336) x (1 – 10%) = 2413.35
ROA = Net income/ Total assets = 0.6%
ROE = Net income/ Equity = 12.5%
 Bank leverage ratio = ROE/ ROA= 20.84
3. Given that last year, the bank’s ROA is 0.55%, the bank leverage ratio is 21.5. What
was the bank’s ROE last year? Comment on the bank performance.
ROE = 21.5 x 0.55%= 11.825%

Exercise 8. The following tables present a balance sheet and an income statement (which have
been simplified) of an example bank:

Bank ABC BALANCE SH EET (Unit: mil VND)

ASSET LIABILITIES AND EQUITIES
Cash Deposits and borrowings
27 500 from other credit 25 100
institutions
Securities 86 000 Customer's deposits 411 640
Loans ??? Issuance of valuable papers 30 100
Loan loss provision -9500 Equity 35160
Fixed assets and other properties 19 100
502,00
Total Assets 0 Total liabilities and equities 502 000
1. Calculate the total loan volume to customers of this bank. Comment on the proportion of
loans over total assets of the bank.
Loans = 378900 = 75.47%
2. Calculate net income margin (NIM) and cost income ratio (C/I) given the following
assumptions: Interest revenue: VND 3,850mil, interest expense: VND 1,725 mil, non-interest
revenue: VND1,500mil, non-interest expense: VND 607.5 mil, other things in the income
statement are not material. Present your comments NIM and C/I of this bank if these two
figures in the previous period were 0.4% and 17%, respectively.
interest revenue−interest expense
NIM = =0.42 %
total assets

non−interest expense
C /I = =11.35 %
interest revenue +non−interest revenue

Exercise 9. The following tables present a balance sheet and an income statement (which have
been simplified) of an example bank:

Bank ABC BALANCE SHEET (Unit: mil VND)

ASSET LIABILITIES AND EQUITIES
Cash Deposits and borrowings from
27 500 other credit institutions 25 100
411
Securities
86 000 Customer's deposits 640
Loans 378 900 Issuance of valuable papers 30 100
Loan loss provision -9500 Equity 35160
Fixed assets and other
properties 19 100
502
Total Assets 502 000 Total liabilities and equities 000

a) Briefly comment on the structure of the bank balance sheet.

b) Calculate ROE, ROA and bank leverage ratio, given the following assumptions: Interest
revenue: VND 3,850mil, interest expense: VND 1,725mil, non-interest revenue:
VND1,500mil, non-interest expense: VND 607.5mil, allowance for loan loss is VND
336mil11; tax rate: 10%
c) Given that last year, the bank’s ROA is 0.55%, the bank leverage ratio is 21.5. What
was the bank’s ROE last year? Comment on the bank performance
Exercise 10
A bank has financial statements with following information: (Unit: billion dong)
Average
Average
Asset Liability interest
interest rate
rate
Cash on hand, gold, silver and gemstones Amounts due to the Government and the State
54,678 0% 128,538 2.10%
(Cash and cash equivalents) Banks
Balances at central banks and other credit
7,890 3%Deposits from other credit institutions 41,853
institutions
Financial investment (Trading securities
124,670 5.10%Demand deposits 38,977 0.20%
& Investment securities)
Short-term loans 366,835 8.20%Term Deposits, <12T 2,807 1.60%
Medium & long-term loans 166,280 9.70%Term Deposits, >12T 69 4.50%
Fix assets & other assets 46,095 0%Borrowings from other credit institutions 8,355 1.50%
Deposits from customers 531,389
Demand deposits 158,966 0.20%
Term Deposits, <12T 228,497 4.30%
Term Deposits, >12T 143,926 7.30%
Valuable papers issued 3,661 5.90%
Other liabilities 1,557
Shareholder equity 51,095 0.00%
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 securities 728
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%