I wonder if the $FTP\%$ term for loans in the following formula
$$FTP\%=\text{BaseRate} + \alpha \,\text{LP}_{1y}+(1-\alpha) \,\text{LP}_{6m},$$
where $\text{LP}$ is a liquidity premium, is a measure for the bank's profit?
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$\begingroup$ FTP% is the cost of the funds to the bank, they lend money out to customers at a rate higher than this (I hope) and the difference is their profit. The cost of funds for a bank is like the Cost of Goods Sold for a shop. $\endgroup$– nbbo2Commented Apr 25, 2020 at 14:39
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$\begingroup$ Thanks, so a lower FTP% is better? Is it possible to have a FTP rate of 50%? @noob2 $\endgroup$– Natalie_edsCommented Apr 25, 2020 at 15:09
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$\begingroup$ Yes, I don't know where you got this 50% but it seems much too high. $\endgroup$– nbbo2Commented Apr 25, 2020 at 15:59
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