Answer the following questions regarding analysing loan portfolio information, show your workings for the calculation:

Use the following information to establish how much Bank As loan portfolio deviates from the national average: (2 marks)

	Bank A	National Ave.
Consumer loans	45%	25%
Overdrafts	5%	15%
Business loans	20%	20%
Mortgage	30%	40%
	100%	100%

Assume the standard deviation calculated in part a. of this question for Bank A is very large compared to the standard deviation of other banks. Is it necessarily bad for Bank A? (2 marks)

A sample of 10,000 customers of similar size and activity have been observed. On average 115 have defaulted on their obligations per year and only 40 % of the outstanding debt could be recovered. The average exposure per customer is $45,000. Use the ACRA principle and calculate the total expected loss and the credit risk premium per customer. (2 marks)