Banking firm determination declining profitability of their traditional lending business has begun to measure the overall profitability of lending relationships. A loan pricing model estimates the profit and return on equity of commercial loans. Additional work was required to recognize the revenue from fee-for-service business, for the same customer, which is carried out by other units in the bank. The case raises the issue of income and expenses from different activities are combined t … Read more »

Banking firm determination declining profitability of their traditional lending business has begun to measure the overall profitability of lending relationships. A loan pricing model estimates the profit and return on equity of commercial loans. Additional work was required to recognize the revenue from fee-for-service business, for the same customer, which is carried out by other units in the bank. The case raises the issue of income and expenditure of various activities can be combined to produce an accurate picture of customer profitability.
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from
Robert S. Kaplan
Source: Harvard Business School
16 pages.
Release Date: 09 October, 1990. Prod #: 191068-PDF-ENG
Manufacturers Hanover Corp.: Customer Profitability Report HBR case solution

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