Question

Bank A’s gross interest income =5.3%, gross interest expenses = 2.5%, noninterest income = 3%, noninterest expense = 3.5%, loss loss provision = 1%, securities gain = 0.1%, tax rate on income = 30%. Calculate Bank A’s net income after tax.

Answer 1

Ans:-

In the given case the Data is given in percentage..so we assume that $1000 = 100%. now on the bases of ammount ($1000) we find the Net income after tax. which is calculated in below Table

Particular	Ammount $ $1000=100%
Gross interest income	53
- interest expense	25
Gross income	28
+non interest income	30
- non interest expense	35
+security Gain	1
-provision for Loss	10
Net income before Tax	14
- Tax (30% on 14)	4.2
NET INCOME AFTER TAX	9.8

So in the percentage terms the BANK A's Net income after Tax is 0.98%