The Editable Formula window enables you to define the expression used to calculate the profitability parameter. You can link a profitability parameter to a product type. The profitability formula defined in this section is used for calculations throughout the application.
Five profitability parameters are available by default, namely, ROTA, RAROC, Revenue, NIM and SVA. These parameters are displayed in the Name column. The associated expression for the parameter is displayed in the Expression column. You can also search for a particular parameter.
The seeded expressions for each of the seeded profitability parameters is shown below:
· For ROTA - Net_Income_before_tax/deal_amount * 100
· For RAROC - case when unExpected_Loss = 0 then 0 else (NET INTEREST INCOME+NON INTEREST INCOME-OPERATING EXPENSES-EXPECTED LOSS+Return_on_UL)/(UNEXPECTED LOSS)*100 END
· For Revenue - Total_Revenue/deal_amount * 100
· For NIM - Net_Interest_Income/deal_amount * 100
· For SVA - NET INTEREST INCOME+NON INTEREST INCOME-OPERATING EXPENSES-EXPECTED LOSS+Return_on_UL-UNEXPECTED LOSS *(COST OF CAPITAL/100)