2018-11-05 NPL and value added creation -> simple model

Setting a model with 3000 loans issued a month, interest rate of 1% a day, 80 EUR a loan, COF irrelevant as it is not calculated inside, NPL ratio variable, 50% of loans additional income from 6 EUR for highest NPL to 1 EUR for NPL of 9%

This graph represent the value added created (diameter of the bubble) depending on the NPL (horizontal axis) and additional income in EUR per loan (6 EUR - 1 EUR). As the loan with NPL of 14,83% did not generate any value -> bubble is non-existent.

 This graph shows the correlation between cleared interest income + other income (1-6 EUR) that is decreased by NPL => total income.

This graph show the linear correlation between NPL ratio and income on a set parameters. We can state, that additional % of NPL decreases value added (real income) by 33.851 EUR.