current value

Hypothetical worst case nightmare scenario:

RHG loses half its loan book through being unable to fund and make a profit leaving a $7 billion loan book left (however, based on today’s news things are looking more hopeful).

Of that loan book, funding is provided at a horrendous average of 75 basis points above the official rate. Based on current rate of %6.75, that would mean paying 7.5% interest. Based on RAMS average current loan rate of 8% that would mean a 0.5% profit margin (was 18 points above with a 1% profit margin).

Factoring in a 30% run off rate that would leave a loan pool of $4.9 billion. Gross income on this basis would be $24.5 million pa. This equates to approx. $0.068 per share.

Allowing $6.65 million for operating expenses leaves a net $0.05 cents per share dividend.

Based on today’s share price, that means a net return of 20% per annum to the shareholder!

I am not an accountant by any stretch and perhaps I’ve missed something, but based on the above assumptions, I fail to see how anyone can lose at current share prices (as long as you are after income and not growth).