Attached is a very simple working model on a bankBUTwith no forecasts.The model has a simple P+L, balance sheet and, some ratios and workings.

Drive the forecasts for this particular bank over the next 3-years and come up with a valuation and a summary investment recommendation.

To help with forecast earnings we note the following:

1)Nominal GDP growth is set to increase by 0.5% p.a. over the next 3-years

2)Bank loan growth is closely correlated to nominal GDP growth with the multiplier in FY20e through to FY22e - resetting to 2.0X

3)Loans as a % of total assets is set to increase to 73% by FY22e and RWA as a % of total assets will stay constant at 54%

4)Interest rates over the forecast period are set to increase by 0.5% per annum and we note a strong relationship between Avg. REPO rate and Net Interest Margin (NIM)

5)The average difference between the NIM and REPO is 6.35% and use this as a base to grow NIM

6)To drive net interest income growth, AIEA as a % of total assets can be assumed at 80% over the forecast period

7)This bank is on a big drive to grow non-interest revenue (NIR) and would like to see it at 50% of total revenue by FY22e - assume a glide path to this level

8)Improving efficiency is a major focus and the cost to income ratio needs to drop to 50% by FY22e

9)Asset quality is set to improve and the credit loss ratio will reduce from here to a cyclical low of 35bp

10)Associate income can be grown at 5% per annum

11)Tax rate is set at 25% over the forecast period

12)The banks share count will increase by 0.5% per annum

13)The Banks capital ratios are high and even though loan growth will accelerate the bank will increase its pay-out ratio to 60%

14)The long term Bond yield for valuation purposes is 8.0%, and Equity Risk Premium of 5% and Beta of 1.0X. The long term growth rate is 6%

This bank's shares are listed and they currently trade at R200 per share. The share in the recent past has traded at closer to 2.0X PBV or 12X PE.

Based on your valuation and expected earnings growth and ROE would you suggest that the stock is an attractive investment or something to stay clear of?