The banking company reported a decline in profitability from its traditional lending activities started to measure the overall profitability of their lending relationships. Loan pricing model estimates the profit and return on equity of commercial loans. Further work was required to recognize income from fees for services business for the same clients that implement other parts of the bank. The case raises the issue of how the income and expenses of the various activities can be combined to obtain an accurate picture of the profitability of customers. "Hide
by Robert S. Kaplan Source: Harvard Business School 16 pages. Publication Date: 09 Oct 1990. Prod. #: 191068-PDF-ENG
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