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Methods and Practices: The Economic Value of Loan AssetsPublished by: IDC Published: Oct. 20, 2009 - 15 Pages Table of ContentsTable of Contents Financial Insights Opinion In This Report Situation Overview Method SpecificsIncome Statement ApproachAnalytical Assumptions to ConsiderWhat Is Net Present Value?Estimating Credit Losses Using Credit ScoresConclusionFuture Outlook Essential Guidance Actions to ConsiderLearn More Related ResearchSynopsisTable: Example of Monthly Vintage Cash Flow ($) Table: Example of First and Last Three Months of Cash Flows ($) Table: Example of Net Present Value of Single Loan ($) Table: Example of Tolerance for Maximum Charge-Off ($) Table: Estimated Loss Vectors Using Credit Scores Figure: Net Present Value Calculation Figure: Projected and Discounted Monthly Cash Flows AbstractThis Financial Insights report focuses on the deployment of a pricing model that uses an income statement approach within the context of a discounted cash flow analysis. "As lending capital becomes constrained, loans at the individual and portfolio level need to represent economic value. By using an income statement approach combined with a financial valuation methodology, loan assets are viewed in a new light, as economic assets. Measuring the economic value of loan assets brings together marketing, risk, and finance objectives," says Dana Wiklund, research director of Global Risk Management, IDC Financial Insights. Get Full Details About This Report >> |
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