Ann: Half Yearly Report and Accounts, page-7

This is true for the mortgage book, as NIM is lower (and funded by a non-recourse). But if the personal loan book is funded 50/50 at the current NIM and arrears numbers, the returns will still be satisfactory.

Probably something you've already considered, but as a thought experiment one can do the following:
(I don't have the exact figures on me, but I did this last FY)
Take the interest earned from personal loans divided by the average personal loans figure during the half. This gives you an approximate interest rate charged to borrowers.
Then, take a look at the interest rate FSA pay on the line of credit.

If you take the interest rate earned, then subtract the interest rate paid, you get your NIM (obviously)

If fully funded by debt, it's effectively an infinite return on equity (as there is no equity involved). However, even at a 50% equity figure, the ROE on the loans would effectively be double the NIM (adjusting for interest paid on half of funding and additional overheads for extra loans).



Given the personal loans are not funded by the non-recourse facility, I'd rather a more conservative funding model. But given management's track record, I'm sure they've well and truly considered this.