Margin Summary
2.15
Total Rate
| Limit Fee | 1.00% |
| Margin | 1.15% |
| Undrawn Fee | 0.50% |
Facility Details
$30
Facility Limit
| Facility Limit | $30,000,000 |
| Drawn | $25,500,000 |
| Facility Term | 3.00 years |
Other Fees
7.5
Fees per annum
| Upfront Fees | 7.5pts / year |
| Cross-sell | n/a |
| Remaining Term | 1.25 years |
Financial Performance
| Scenario | Base Case Performance |
| Source | Management Financial FY2019 |
| Analysis Date | 31-Dec-2019 |
Financier
Risk Estimation Model
Review of historical margins
20.4
Excess Margin over Fair Return
26
Calculated Bank Return
1.35%
Fair Margin
@ 30-Jun-2018 calculated @ 14.0% RoE
Scenario Pricing Date: 31-Mar-2018
Margin Summary
2.25
Bank Proposed
| Limit Fee | 1.00% |
| Margin | 1.15% |
| Undrawn Fee | 0.50% |
Facility Details
$35
Proposed Limit
| Facility Limit | 1$35,000,000 |
| Drawn | $35,000,000 |
| Facility Term | 4.00 years |
Other Fees
7.5
Fees per annum
| Upfront Fees | 7.5pts / year |
| Cross-sell | n/a |
| Remaining Term | 1.25 years |
Financial Performance
| Scenario | Base Case Performance |
| Source | Management Financial FY2019 |
| Analysis Date | 31-Dec-2019 |
Financier
Risk Estimation Model
Review of proposed margins
20.4
Excess Margin over Fair Return
26
Calculated Bank Return
1.35%
Fair Margin
@ 30-Jun-2018 calculated @ 14.0% RoE
Scenario Pricing Date: 31-Mar-2018
Initial Pricing Date
When your Facility pricing was negotiated in Jun 2018,
- Total Margin was 1.70% for 3.0 years.
- This generated a Return on Equity [RoE] of 24.2% for your financier: ANZ.
- A Fair Margin that achieved a Bank hurdle RoE of 14.0% would have been 1.50%.
- Opportunity cost: 15-25 pts
- $225,000 Cost
This is based on;
- Company Financial scenario ‘Management FY20818’
- Company Risk Grade of C3-D1 [CBA internal risk scale]
- Historic Bank, Regulatory, Wholesale Market and Facility Structure data points.
Analysis Date
A margin review as at Jan 2020,
- Updated for Company supplied Financials ‘Forecast FY2019 Base Case’
- With an updated Customer Risk Grade of C2-C3 [CBA scale]
- Fair Return Bank Hurdle RoE of 14.0%
- Re-based pricing variables for current Bank, Regulatory, Wholesale Market and Facility structure…
- A Total Margin  1.50% for 3.0 years
- Cost Saving of $315,000
This compares to your Bank Proposed offer of;
- Total Margin 1.85%Â (bank proposed)
- which yields Bank RoE = 26.5%
- or an Opportunity Cost of 25pts.
Base Case 2018
Limit Fee
0.75%
Margin
0.55%
Total Margin
1.30%
chart-3
Base Case 2019
Limit Fee
0.80%
Margin
0.61%
subtitle
Total Margin
1.30%
Top 3 variable increasing margin
- +5.0 pts due to increase in CET1
- +1.3 pts due to reduced funding benefit on the Non-bearing Interest Deposit Funding
- 0.43 pts increase in Operational Risk Weighted Asset allocation
Top 3 factors decreasing the Total Margin
- -6.5 pts due to reduction in Wholesale Funding Costs
- -2.3 pts due to improvement in Customer Risk Grade
- -1.2 pts due to reduction in Term Deposit funding costs.
Facility Details
Financial Performance
Bank Dimensions
| Facility Term | |
| Interest Benchmark | |
| Interest Period |
| Revenue | |
| EBITDA | |
| Liabilities |
| Target Metric | |
| Target RoE | |
| CET1 Selection |
Base Case 2018
Limit Fee
0.75%
Margin
0.55%
Total Margin
1.35%
chart-4
Base Case 2018
Limit Fee
0.75%
Margin
0.55%
Total Margin
1.35%
Top 3 variables increasing margin
- +5.0 pts due to increase in CET1
- +1.3 pts due to reduced funding benefit on the Non-bearing Interest Deposit Funding
- 0.43 pts increase in Operational Risk Weighted Asset allocation
Top 3 factors decreasing the Total Margin
- -6.5 pts due to reduction in Wholesale Funding Costs
- -2.3 pts due to improvement in Customer Risk Grade
- -1.2 pts due to reduction in Term Deposit funding costs.