FACULTY OF MANAGEMENT AND MUAMALAH

FINAL EXAMINATION
SESSION II, ACADEMIC YEAR 2019/2020

MBFB 3093
CREDIT MANAGEMENT

INSTRUCTIONS TO CANDIDATES:
1. The time allotted for this paper is 2 HOURS.
2. This question paper consists of THREE questions.
3. Answer TWO questions only and Question 1 is COMPULSORY.
4. This question paper requires:
i) Answer Booklet.
5. Total marks for this paper is 50 MARKS.
6. This question paper is ALLOWED to be taken out from the examination hall.

THIS QUESTION PAPER CONSISTS OF 4 PRINTED PAGES.

DO NOT OPEN UNTIL YOU ARE TOLD TO DO SO.
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Answer any TWO questions in the answer booklet provided and Question 1 is
COMPULSORY.

Question 1

a. Rahimah has been offered an Amanah Senyum Bahagia (ASB) loan amounted
RM80,000 with a duration of 25 years from Segar Bank on 28th March 2016 which
charges 7 percent per annum interest rate for the loan. Agreeing to the loan
agreement, the payment due date is on the 2nd of every month. Unfortunately,
Rahimah has defaulted on her monthly installment for the month of September
and she only started paying her loan on the 15th November 2016. (Assume 30
days in a month).
Based on the scenario above, you are required to:
i. compute Rahimah’s interest overdue. (4 marks)
ii. calculate how much Rahimah will have to pay for her loan on the 15th
November 2016 if her monthly installment for the loan is RM400 per month.
(4 marks)

b. Koda Kodi Bank has approved a car loan to En. Jojo for him to purchase a new
Perotiga Titi from a car dealer at a selling price of RM105,000. The particulars of
the car loan are as follows:
Loan duration : 7 years
Interest rate : 4.4 percent per annum
Requested loan amount : RM94,500
You are required to calculate on the following components:
i. the bank’s profit. (2 marks)
ii. the total payment to the bank. (2 marks)
iii. the monthly installment to the bank. (2 marks)

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c. Suppose you are interested in buying a house from Bina Jaya Developer Bhd
valued at RM500,000 with a 30-year fixed rate of 6 percent per annum. Bina Jaya
Developer requests 10 percent down payment from you and the remaining
balance will be financed by Seri Seri Bank. According to the bank’s credit
assessment, the monthly installment for the loan is RM2,697.98.
i. Based on the information above, you are required to prepare a housing loan
amortization table up to the 5th payment. (10 marks)
ii. Calculate the remaining balance of your housing loan after paying the 5th
payment. (1 mark)

Question 2

Asset backed securitization in Malaysia started in 1986 and many companies have
been reported to participate in getting the benefits of securitization that can improve
performance of companies. However, at the end of 2007, the United States (U.S) had
faced subprime mortgage crisis which affected several countries. This situation also
affected Malaysia’s economy until the end of 2008 where the asset backed securities
industry slowed down and decline since investors had become more cautious in
making any investment. This directly affected issuers of securitization included the
banking industry.

a. Define securitization. (2 marks)

b. Discuss four reasons why bank securitize their assets. (8 marks)

c. Discuss briefly the modus operandi of securitization in banking industry.

(10 marks)

d. If you are hired as a Managing Director of a commercial bank in your country, do

you prefer to implement securitization as an approach to mitigate non-performing
loan in your bank? Justify your view. (5 marks)

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Question 3

a. The CAMPARI model is an alternative to the 5Cs framework and helps to guide
credit officers in assessing loan applications. The model is deemed to be most
relevant in assessing individual loan rather than corporate loan application.
Discuss briefly any five components in CAMPARI model by providing suitable
examples. (20 marks)

b. Explain briefly how the product lifecycle would affect the decision of giving out
loan to a business borrower. (5 marks)

END OF QUESTION PAPER

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