Ann: Appendix 4E and Annual Report, page-13

If you want to think about bad loans on a returns basis, think of it like this.

For every $100 they lend out, they make fees and X% interest rate
They pay a portion of X to fund the loan (plus 30% of their own funds)

So, determine what you think a sufficient return on equity is, then you know what your end goal is. If you want to make 20%, then $60k from $1m of loans is your end goal (your equity in this case is $300k).

Effectively, you have:
NIM + fees - bad loans = earnings

If you know what the other variables are, you can figure out what a good 'bad loans' figure looks like.

So on $1m, they make say $150k + fees, pay $50k.



If you want something on a relative basis, a close comparison is the auto loans book in MNY (the majority of their business). MNY run a very low cost operation, so they can afford a higher delinquency rate, but it should give you an idea.
Hint: Their book is nowhere near as good as FSA.