Question

QUESTION 23

B3

On a scrap paper, make the calculations necessary to answer the questions below.  Then use your draft to fill the following multiple blanks. The scrap paper will not be uploaded but needs to be kept for future reference.

Northern territory Bank Plc had the following operations in year 2019 (expressed in $000).

Electricity and water bills: 130

Dividends paid to shareholders: 15.2

Coupons from investment in corporate bonds: 410.9

Interest on customers' term deposits: 250.8

Petrol for the business cars: 2.6

Write off of loans with no existing lending provisions: 12.2

Interest on business loans to commercial companies: 405.8

Distribution on issued capital notes: 50.4

Taxes on profits: 12.4

Commission for customers' advice on retirement investments: 124.2

Charge for bad and doubtful debts: 84

Interest on interbank lending: 33.2

Fees for late repayment by customers of credit card balances: 15

Salaries: 87.6

Unrealized capital gains on held-to-maturity securities: +10

Realized capital gains on available-for-sale securities: -35

Express your result in $000. You must not type $ sign or comas. Your will round your result to ONE decimal when your answer is expressed in $000. If your result is $10,530 you will be required to type 10.5.

Assuming that mark-to-market standards apply to Northern territory Bank and using the conventions of the course,

Calculate the interest income ____ ____   

Type your result twice to get the double amount of marks. If you had an hesitation about including or excluding an item while calculating the interest income you can enter a second answer. (Of course at the best you will get half the marks allocated to that question).

Calculate the interest expense ____ ____

Type your result twice to get the double amount of marks. If you had an hesitation about including or excluding an item while calculating the interest expense you can enter a second answer. (Of course at the best you will get half the marks allocated to that question).

Calculate the non interest income ____ ____   

Type your result twice to get the double amount of marks. If you had an hesitation about including or excluding an item while calculating the non interest income you can enter a second answer. (Of course at the best you will get half the marks allocated to that question).

Calculate the non interest expense ____ ____   

Type your result twice to get the double amount of marks. If you had an hesitation about including or excluding an item while calculating the non interest expense you can enter a second answer. (Of course at the best you will get half the marks allocated to that question).

Calculate the profit before tax ____ ____   

Type your result twice to get the double amount of marks. If you had an hesitation about including or excluding an item while calculating the profits before tax you can enter a second answer. (Of course at the best you will get half the marks allocated to that question).

Answer 1

The entity mentioned here is bank. The major Interest income for banks are Interest received on loans lent and Investment made.

Non -Interest Incomes are Commission charged for providing utilty functions such as lockers, Underwriting and agency functions such as transfer of funds etc.,

The major Interest expense is providing interest on deposits.

Transactions	Amount
Interest on business loans to commercial companies	405.8
Add:Coupons from investment in corporate bonds	410.9
Add: Interest on interbank lending	33.2
Total Interest Income	849.9
Add: Fees for late repayment by customers of credit card balances	15
Add: Commission for customers' advice on retirement investments	124.2
Add/Less: Realized capital gains on available-for-sale securities	-35
Total Non- Interest Income	104.2
Total Income	989.1
Less:Interest on customers' term deposits	250.8
Total Interest Expense	250.8
Less: Electricity and water bills	130
Less: Petrol for the business cars	2.6
Less: Salaries	87.6
Total Non Interest Expense	220.2
Less:Write off of loans with no existing lending provisions	12.2
Less:Charge for bad and doubtful debts	84
Total Expenses	471
Profit before tax	518.1
Tax on Profit	12.4
Profit After Tax	505.7

Final Answer:

Interest Income:849.9

Interest Expense:250.8

Non Interest Income:104.2

Non Interest Expense:220.2

Profit before Tax: 518.1

Kindly note:

1. Unrealized capital gains on held-to-maturity securities are considered as Other Comprehensive Income and it doesn't affect the Net Income of the Bank.

2. Distribution on issued capital notes are the bonds issued to raise funds and form the part of balance sheet.

3. Dividends are paid out of the Net profit generated after Tax.