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Methods and Practices: The Economic Value of Loan Assets

Product Type: Market Research Report
Published by: IDC
Published: October 2009
Product Code: R104-40347
Description

This 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.

Table of Contents
Table of Contents
Financial Insights Opinion


In This Report
Situation Overview
Method Specifics
Income Statement Approach
Analytical Assumptions to Consider
What Is Net Present Value?
Estimating Credit Losses Using Credit Scores
Conclusion
Future Outlook
Essential Guidance
Actions to Consider
Learn More
Related Research
Synopsis
Table: 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
Ordering and More Information
Price and Delivery Options


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