Annual Report - VÚB banka

35. Financial risk management (continued)
Write-off policy
The Bank writes off a loan or security balance
(and any related allowances for impairment losses)
when it determines that the loans or securities are
uncollectible. As the standard, the Bank considers
the credit balances to be uncollectible based on
the past due days, i.e. 180 or 360 days past due
depending on the type of segment or product. All
credit balances are being reviewed for eligibility to
be written off on a monthly basis.
The credit balance can be written off earlier than
defi ned in conditions described above if there is
evidence that the receivable cannot be collected.
The write off of such receivables is subject to the
approval of the Credit Risk Offi cer.
The Bank holds collateral against loans and advances
to customers in the form of mortgage interests
over property, other registered securities
over assets, and guarantees. Estimates of fair value
are based on the value of collateral assessed at the
time of borrowing and generally the Bank updates
the fair value on a regular basis.
An estimate of the fair value of collateral and other security enhancements held against fi nancial assets is
shown below:
2007 2006
Clients Banks Clients Banks
Debt securities 2 28,668 12 22,435
Other 9,853 607 9,177 609
Property 97,768 - 73,586 -
107,623 29,275 82,775 23,044
104
The debt securities collateral received from banks represents the fair value of the collateral received in the
reverse REPO trades with banks. The Bank is permitted to sell or repledge this collateral in the absence of
default by the owner of the collateral. None of the collateral was sold or repledged at 31 December 2007
and 2006.
The Bank monitors concentrations of credit risk by geographic location. An analysis of concentrations of
credit risk at the reporting date is shown below.
2007 2006
Cost Impair- Carrying Cost Impair- Carrying
ment amount ment amount
losses
losses
Europe
Loans and advances to banks 34,409 (2) 34,407 35,486 (2) 35,484
Loans and advances to customers 123,286 (3,411) 119,875 92,991 (3,859) 89,132
Held-to-maturity securities 90,671 (20) 90,651 86,531 (24) 86,507
248,366 (3,433) 244,933 215,008 (3,885) 211,123
North America
Loans and advances to banks 700 (24) 676 3,098 (31) 3,067
Loans and advances to customers 34 (1) 33 14 - 14
Held-to-maturity securities 70 - 70 73 - 73
804 (25) 779 3,185 (31) 3,154
Asia
Loans and advances to banks 7 - 7 11 - 11
Loans and advances to customers 7 - 7 20 - 20
14 - 14 31 - 31
Rest of the World
Loans and advances to banks - - - 4 - 4
Loans and advances to customers 16 - 16 3 - 3
16 - 16 7 - 7
Under Europe, substantially all loans are made to Slovak entities or residents. Generally, the Bank does not
engage in cross border lending.
Annual Report 2007