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Normanby Bank has the following information. The bank anticipates that in th...
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Normanby Bank has the following information.
Assets | Amount ($million) | Rate earned per annum | Liabilities and Equity | Amount ($million) | Rate paid per annum |
3-month Treasury notes | 250 | 5.5% | 6-month certificates of deposit | 550 | 5% |
6-month personal loans (fixed rate) | 300 | 6.5% | 2-year term deposits (fixed rate) | 320 | 6% |
2-year corporate term loans (fixed rate) | 150 | 8.5% | 30-year subordinated debts (variable rate adjusted quarterly) | 180 | 7.5% |
30-year mortgage loans (variable rate adjusted monthly) | 550 | 7% | Equity | 250 |
|
Premises (non-earning) | 50 |
|
|
|
|
Total | 1,300 |
| Total | 1,300 |
|
The bank anticipates that in the next 12 months, interest rates on Rate-Sensitive Assets will increase by 50 basis points, and interest rates on Rate-Sensitive Liabilities will increase by 100 basis points. What will be the expected change in the bank's annual Net Interest Income (NII)?