A credit union has a net interest margin (NIM) of 4%, a Burden of 1%, a Provision for Loan Loss % of 0.50%, and an equity multiplier (assets to equity) of 10. As a non-profit organization, it does not pay taxes, what are the credit union's ROA and ROE?

Question

Quizplus · Accepted Answer

The ROA (Return on Assets) is calculated as NIM - Burden - Provision for Loan Loss, which is 4% - 1% - 0.50% = 2.5%. The ROE (Return on Equity) is calculated as ROA multiplied by the equity multiplier, which is 2.5% * 10 = 25%.

A Credit Union Has a Net Interest Margin (NIM) of 4