Key regulations, policies and Information for the purpose of this case study . Debt Burden Ratio (OBR) - 50% (in case of Personal Loans only) 60% (in case of housing loans) (DBR = (Total Instalments payable 5% of Credit Card Limit)/Monthly Income) D Debt Service Coverage Ratio (DSCR) - 1.25x (DSCR = Net Annual Income / Total Obligations under credit facilities) . Maximum Age for lending 70 Years (The loan must be repaid before the customer attains the age of 70 years) Loan to Value: Maximum 50% of the value Security Asset Coverage of minimum 200% (Value of the Security/Credit Facility Amount) . The end use of the funds should be certifiable . Maximum Tenor Loan Type Max Term 12 Years + 2 Years Moratorium Commercial Real Estate Housing Loan Till the age of 60 (sub to max 25 Years) Overdraft Renewable every 12 months Yacht Finance 8 Years Car Loan 5 Years Personal Loan 7 Years . Return on Equity to be minimum 16.326% p.a. (ROE - Margin over FTP (in %)/Capital Contribution (in %)) Please assume copitol contribution at 15.50% . Pricing: Interest Rate FTP Margin or Spread (To be calculated basis the ROE) . Processing Fees can be 1.00% of the loan amount FTP for various durations is given as under Duration FTP (%) Duration FTP (%) 1 Year 2.25 11 Year 4.27 2 Year 2.39 12 Year 4.33 3 Year 2.55 13 Year 4.47 4 Year 3.01 14 Year 4.54 5 Year 3.37 15 Year 4.67 6 Year 3.48 16 Year 4.71 7 Year 3.64 17 Year 4.79 8 Year 3.77 18 Year 4.89 9 Year 3.99 19 Year 5.01 10 Year 4.12 20 Year 5.15 Products FTP (%) Housing Loan 3.23 Car Loan 3.57 Overdraft 4.01 Life Insurance premium - 0.2 % p.a. Customer's requirement: . A loan facility of RO 2.80 Mio to be utilised for following: . 10 RO 850,000 to take over the residual loan from Z Bank (Commercial Real Estate Financing) RO 250,000 Fresh Overdraft 0 RO 500,000 Housing Loan RO 250,000 Car Loan RO 200,000 Credit Card 3 RO 500,000 Personal Loan (Cash) O RO 250,000 Yacht Finance. Collateral/Security: Mortgage over property, Pledge over securities, Income assignments, Property Value: RO 1.60 Mio O D Investment Value: RO 5.2 Mio Customer's current age is 42 Years Customer's Incomes are as under: D Rental Income RO 75,000 p.m. (Municipality Tax 3%, Maintenance Cost 10%, Vacancy Haircut 20%) O Monthly Income Distribution of Family Trust of RO 25,000 O Investment Income for past 3 years Year CY19 CY20 CY21 Annual Income RO 500,000 RO 750,000 RO 250,000 CY20 CY21 . O 10 O Customer's Net-worth (RO Mio) Particulars Real Estate Land Parcels Investments 4.3 Holdings in Companies 8.7 Other Assets 1.8 Total Assets 41 26.8 (2) (1) Less: Liabilities Net-worth 41 25.8 Q1. Please make the financial projections Q2. Please evaluate the overall financial strength and state your decision & facility structure Q3. Calculate the pricing basis the given FTP and ROE target Q4. You are facing a very stiff competition and hence you have to adjust the rates by 1.25%. Please state the % shortfall in ROE target. Q5. Please write a proposal to the approving authority Q6. Please state all associated risks and mitigants Q7. Please state the value of the collateral required to be pledged considering the property is already mortgaged Q8. The customer is a well-known to your family and he is asking u to allow him a DSCR of 1.1x. Considering the strong net-worth & incomes of the customer, this should not be an issue. What is your opinion? Q9. Consider the Interviewer is this customer and negotiate the pricing. Q10 Please state the key learnings from this case study. 15 57 6 11 2 10 2 00 Key regulations, policies and Information for the purpose of this case study . Debt Burden Ratio (OBR) - 50% (in case of Personal Loans only) 60% (in case of housing loans) (DBR = (Total Instalments payable 5% of Credit Card Limit)/Monthly Income) D Debt Service Coverage Ratio (DSCR) - 1.25x (DSCR = Net Annual Income / Total Obligations under credit facilities) . Maximum Age for lending 70 Years (The loan must be repaid before the customer attains the age of 70 years) Loan to Value: Maximum 50% of the value Security Asset Coverage of minimum 200% (Value of the Security/Credit Facility Amount) . The end use of the funds should be certifiable . Maximum Tenor Loan Type Max Term 12 Years + 2 Years Moratorium Commercial Real Estate Housing Loan Till the age of 60 (sub to max 25 Years) Overdraft Renewable every 12 months Yacht Finance 8 Years Car Loan 5 Years Personal Loan 7 Years . Return on Equity to be minimum 16.326% p.a. (ROE - Margin over FTP (in %)/Capital Contribution (in %)) Please assume copitol contribution at 15.50% . Pricing: Interest Rate FTP Margin or Spread (To be calculated basis the ROE) . Processing Fees can be 1.00% of the loan amount FTP for various durations is given as under Duration FTP (%) Duration FTP (%) 1 Year 2.25 11 Year 4.27 2 Year 2.39 12 Year 4.33 3 Year 2.55 13 Year 4.47 4 Year 3.01 14 Year 4.54 5 Year 3.37 15 Year 4.67 6 Year 3.48 16 Year 4.71 7 Year 3.64 17 Year 4.79 8 Year 3.77 18 Year 4.89 9 Year 3.99 19 Year 5.01 10 Year 4.12 20 Year 5.15 Products FTP (%) Housing Loan 3.23 Car Loan 3.57 Overdraft 4.01 Life Insurance premium - 0.2 % p.a. Customer's requirement: . A loan facility of RO 2.80 Mio to be utilised for following: . 10 RO 850,000 to take over the residual loan from Z Bank (Commercial Real Estate Financing) RO 250,000 Fresh Overdraft 0 RO 500,000 Housing Loan RO 250,000 Car Loan RO 200,000 Credit Card 3 RO 500,000 Personal Loan (Cash) O RO 250,000 Yacht Finance. Collateral/Security: Mortgage over property, Pledge over securities, Income assignments, Property Value: RO 1.60 Mio O D Investment Value: RO 5.2 Mio Customer's current age is 42 Years Customer's Incomes are as under: D Rental Income RO 75,000 p.m. (Municipality Tax 3%, Maintenance Cost 10%, Vacancy Haircut 20%) O Monthly Income Distribution of Family Trust of RO 25,000 O Investment Income for past 3 years Year CY19 CY20 CY21 Annual Income RO 500,000 RO 750,000 RO 250,000 CY20 CY21 . O 10 O Customer's Net-worth (RO Mio) Particulars Real Estate Land Parcels Investments 4.3 Holdings in Companies 8.7 Other Assets 1.8 Total Assets 41 26.8 (2) (1) Less: Liabilities Net-worth 41 25.8 Q1. Please make the financial projections Q2. Please evaluate the overall financial strength and state your decision & facility structure Q3. Calculate the pricing basis the given FTP and ROE target Q4. You are facing a very stiff competition and hence you have to adjust the rates by 1.25%. Please state the % shortfall in ROE target. Q5. Please write a proposal to the approving authority Q6. Please state all associated risks and mitigants Q7. Please state the value of the collateral required to be pledged considering the property is already mortgaged Q8. The customer is a well-known to your family and he is asking u to allow him a DSCR of 1.1x. Considering the strong net-worth & incomes of the customer, this should not be an issue. What is your opinion? Q9. Consider the Interviewer is this customer and negotiate the pricing. Q10 Please state the key learnings from this case study. 15 57 6 11 2 10 2 00