FIN20013 Banking Operations and Governance - Finance Questions Assignment Help

ANSWER 1:

Using the cumulative re-pricing model, the re-pricing gap for 1 year and 3 year is given as follows:

A: For 1 year:

1 year Repricing Gap = Rate Sensitive Assets – Rate Sensitive Liabilities

  = ($50 + $730 + $220) – ($205 + $150 + $350 + $520 + $200)

= $1000 - $1425

= -$425 million

3 year Repricing Gap = Rate Sensitive Assets – Rate Sensitive Liabilities

= ($50 + $100 + $90 + $730 + $220) – ($205 + $150 + $350 + $520 + $200)

= $1190 - $1425

= -$235 million

ANSWER 2: 

For finding the impact on net interest income for 6 months planning, we need to calculate rate sensitive assets and rate sensitive liabilities for the 6 months.

RSA = $50 

RSL = $205 + $150 + $350 + $520 + $200= $1425

ΔInterest Income = $50 (-0.003) = -$0.15 million

ΔInterest Expense = $1425 (0.005) = $7.125

ΔNet Interest Income = -$0.15 - $7.125 = -$6.975 million