Below is the income statement of Ally bank as of 2014Q4 Calculate net income and assess if capital plan can be approved under 4 quarters of stressed period Year ended December 31, 2014 ($ in millions) Ally consolidated Total financing revenue and other interest income 8391 Total interest expense 2,783 Depreciation expense on operating lease assets 2233 Total other revenue 1276 Total net revenue Provision for loan losses 457 Total noninterest expense 2948 Income before tax Tax expense 96 net income Calculate net income Allys risk weighted assets are 130,590, and tier 1 capital is 12,588 Basel III requires Tier 1 common ratio to be at least 5 percent Does Ally meet this requirement in 2014 Suppose we do stress tests for the next 4 quarters for Ally bank The economic capital needed for the next 4 quarters are the following 2500, 2704, 3500, 4098 As for PPNR, the model predicts that Allys net income over the next 4 quarters will drop by 10 every quarter If Ally does not have dividends and stock repurchase plan for 2015, can Ally pass the stress tests We assume risk weighted assets do not change over the stress tests How much room does Ally bank have for capital distribution over the 4 quarters

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Posted on Jul 07, 2024

Below is the income statement of Ally bank as of 2014Q4. Calculate net income and assess if capital plan can be approved under 4 quarters

Below is the income statement of Ally bank as of 2014Q4. Calculate net income and assess if capital plan can be approved under 4 quarters of stressed period.

Year ended December 31, 2014 ($ in millions)	Ally consolidated
Total financing revenue and other interest income	8391
Total interest expense	2,783
Depreciation expense on operating lease assets	2233
Total other revenue	1276
Total net revenue
Provision for loan losses	457
Total noninterest expense	2948
Income before tax
Tax expense	96
net income

Calculate net income

Allys risk-weighted assets are 130,590, and tier 1 capital is 12,588. Basel III requires Tier 1 common ratio to be at least 5 percent. Does Ally meet this requirement in 2014?

Suppose we do stress tests for the next 4 quarters for Ally bank. The economic capital needed for the next 4 quarters are the following: 2500, 2704, 3500, 4098. As for PPNR, the model predicts that Allys net income over the next 4 quarters will drop by 10% every quarter. If Ally does not have dividends and stock repurchase plan for 2015, can Ally pass the stress tests? We assume risk-weighted assets do not change over the stress tests.