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5357d1212897780 Caja Espana Some Notes Caja Espana

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5357d1212897780 Caja Espana Some Notes Caja Espana
Caja Espana: Managing branches to sell

1. Calculating a profit for Gradefes and Madrid-Barrio branches, by traditional method give us following results:
Gradedefs

Deposits

10000
0,10%
10
15000
2,11%
316,5
Assets

6000
2,25%
135
1000
2,64%
26,4
500
0%
0

FR
161,4

FE
326,5

FinMarg
-165,1

fee
12000

usage fee
16210

inter
-30000

salary
-90000

other
-30000

Total: -286890

Madrid-Barrio Deposits

3000
0,10%
3
2000
2,11%
42,2
Assets

10000
2,25%
225
15000
2,64%
396
1000
0%
0

FR
621

FE
45,2

FinMarg
575,8

fee
12000

usage fee
5130

inter
20000

salary
-140000

other exp
-35000

rent
-60000

Total: 377930

2. From previous calculation, using traditional method, we can see that Gradefes branch is unprofitable, otherwise Madrid-Barrio operating well. Calculating profit, using adjustments rates from table 6, gives us more precision results, in which services branches make profit.

Gradedefs

Deposits ADJ RATES
10000
4,01%
401
15000
2,11%
316,5
Assets

6000
2,25%
135
1000
2,19%
21,9
500

0

FR
717,5

FE
156,9

FinMarg
560,6

fee
12000

usage fee
16210

inter
-30000

salary
-90000

other
-30000

Total: 438810

Madrid-Barrio

Deposits
ADJ RATES
3000
4,01%
120,3
2000
2,11%
42,2
Assets

10000
2,25%
225
15000
2,19%
328,5
1000

FR
162,5

FE
553,5

FinMarg
-391

fee
12000

usage fee
5130

inter
20000

salary
-140000

other exp
-35000

rent
-60000

Total: 193130

As we can see, Gradedefs more profitable than Madrid-Barrio branch. Using adjustment rates can help better measure performance of value creation.
3. The financial margin is based on the calculation below:
Financial Margin
= ITDY-ICDY = ICLX-ITLX
Based on the information in the Question 1, the checking account is most profitable (margin=4.01%-0.1%). Thus, the branches may try their best to attract customers to deposit money in the branch. Also, because the ITLX is based on the
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