This is the 2018 Balance Sheet of the Bank B with annually average figures Assets Liabilities & Equity Amount Interest (USD rate mil) (%) 150 Amount (USD mil) 1,500 Interest rate (%) 1 Demand deposit Cash and deposits due from banks 3-month Treasury Bills 550 1 800 5 3-month bank deposits 450 3 2,750 11 5-year fixed-rate Government Bonds 6-month corporate deposits 2,950 12 1450 12-month floating-rate corporate loans 16 Non-deposit borrowings 2,500 17 650 10 year fixed-rate mortgage loans Equity 550 Fixed assets This Bank earned USD 550 mil in fees and commissions and USD 20 mil in securities gain; paid USD 250 mil in overhead costs; USD 950 in loan loss provision. Tier 1 capital was equal to 35% of equity and Tier 2 capital was equal to 10% of non-deposit borrowings, deduction is USD 15 mil. Corporate income tax rate is 18% a. How much are: Net interest margin, ROE, CAR b. How can the bank increase its ROE 1.5 times (two options: increasing average lending rates or reducing average deposit rates) This is the 2018 Balance Sheet of the Bank B with annually average figures Assets Liabilities & Equity Amount Interest (USD rate mil) (%) 150 Amount (USD mil) 1,500 Interest rate (%) 1 Demand deposit Cash and deposits due from banks 3-month Treasury Bills 550 1 800 5 3-month bank deposits 450 3 2,750 11 5-year fixed-rate Government Bonds 6-month corporate deposits 2,950 12 1450 12-month floating-rate corporate loans 16 Non-deposit borrowings 2,500 17 650 10 year fixed-rate mortgage loans Equity 550 Fixed assets This Bank earned USD 550 mil in fees and commissions and USD 20 mil in securities gain; paid USD 250 mil in overhead costs; USD 950 in loan loss provision. Tier 1 capital was equal to 35% of equity and Tier 2 capital was equal to 10% of non-deposit borrowings, deduction is USD 15 mil. Corporate income tax rate is 18% a. How much are: Net interest margin, ROE, CAR b. How can the bank increase its ROE 1.5 times (two options: increasing average lending rates or reducing average deposit rates)