Losses/Profits Calculations

Question

I have a case study (see the picture) and i am struggling to understand the calculations. The case study is on Credit Risk.

The picture shows the data from a bank in the last 12 months including write offs, loses and profits.

I need to understand how the below are calculated ?

1. Total Losses
2. Profits

My first thought for profit is the below relationship :

Profit = Annual Income - Total Losses

However, when i use data from January, for example, the outcome is not correct.

$£288,000 - £229.677 = £58,323 $

Any help it will be appreciated :)

Below is a further description of the variables:

• Accounts Opened in a month
• Average Risk score, for the accounts opened in the month
• Annualised Income (Income over a 12 month period)
• Average Overdraft Amount Granted
• Average Write-Off Balance &
• Annualised Losses (Losses over a 12 month period)

Antonis

Answer 1

Profit = Annual income + Average Granted Overdraft Limit + Average Write-Off Balance - Total Losses