Annual Report 2008 - ProCredit Bank

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26 Annual Report 2008 Risk Management Strong risk management is crucial to the achievement of ProCredit Bank’s main objective, which is to provide reliable banking services to its clients. The bank has a conservative approach in its credit operations and follows a policy not to engage in speculative transactions. Its adheres to a simple business model of lending to core target groups and mobilising retail deposits, undertaking other business activities on only a limited scale to support its lending activities. Our assets and liabilities are broadly diversified across thousands of small businesses and lowerand middle-income savers. This minimises the risk that an individual borrower or group of borrowers could have a substantial adverse impact on loan portfolio quality or that the withdrawal of an individual deposit could jeopardise the bank’s liquidity position. Risks are assessed by four committees, all of which support the Risk Department and operate under its supervision: the Loan Portfolio Review Committee, the Assets and Liabilities Committee (ALCO), the Operational Risk Committee and the Credit Risk Committee. These bodies all meet at least on a monthly basis, while the Risk Department conducts more frequent tests on key risk indicators. The Risk Department is responsible for identifying, measuring, analysing and monitoring potential risks. It reports its findings and recommendations to the Management Board and the relevant departments. However, responsibility for ensuring that the level of risk is properly controlled and managed lies with the respective departments, and ultimately with the members of the Management Board. In line with the ProCredit group’s risk management policy, the bank’s risk position is described in a quarterly risk report, which the Risk Department discusses with the management of ProCredit Bank, the Board of Directors and ProCredit Holding’s Group Risk Management Department. The bank has clearly defined procedures in place and invests heavily in staff training to ensure that all employees are aware of them and of the risks that are entailed in their respective field of operations. In addition, process-based internal controls carried out by the Internal Audit Department are an integral part of the bank’s risk management system. They ensure compliance with legal regulations and internal procedures in all areas. Credit Risk ProCredit Bank makes use of a highly developed technology to manage credit risk at all stages of the lending process. Regardless of the amount involved, each loan is assessed on an individual
Risk Management 27 basis; we do not use scoring systems when analysing loan applications and we maintain close relationships with credit customers throughout the maturity period. Intensive monitoring enables us to identify potential repayment problems at an early stage. We have a broadly diversified portfolio which contains over 65,000 outstanding loans. The average amount disbursed in 2008 was EUR 3,326, and 85.6% of all disbursements were in amounts of less than EUR 10,000. The Loan Portfolio Review Committee analysed outstanding loans both by size and by sector to gauge the bank’s risk exposure in these areas in the light of adverse local and regional economic trends. Despite our adherence to sound credit risk management principles, the portfolio at risk (the proportion of loans in arrears by more than 30 days) increased from 1.6% at the end of 2007 to 2.3% at year-end. This increase can mainly be attributed to very small businesses that became overly indebted. Although our credit risk management
Page 1 and 2: Annual Report 2008 Bosnia and Herze
Page 3 and 4: Contents 3 Mission Statement 4 Lett
Page 5 and 6: Letter from the Supervisory Board 5
Page 7 and 8: The Bank and its Shareholders 7 Com
Page 9 and 10: The ProCredit Group: Responsible Ba
Page 11 and 12: ProCredit in Eastern Europe 11 ProC
Page 13 and 14: ProCredit in Eastern Europe 13 Name
Page 15 and 16: Highlights in 2008 15 • Financial
Page 17 and 18: Management Business Review 17 Polit
Page 19 and 20: Management Business Review 19 Busin
Page 21 and 22: Management Business Review 21 banks
Page 23 and 24: Management Business Review 23 The g
Page 25: Special Feature 25 the comments mad
Page 29 and 30: Risk Management 29 In light of the
Page 31 and 32: Branch Network 31 ProCredit Bank in
Page 33 and 34: Organisation, Staff and Staff Devel
Page 35 and 36: Business Ethics and Environmental S
Page 37 and 38: Our Clients 37 Enver Šuvalija, Ind
Page 39 and 40: Our Clients 39 Borivoje Glogovac, S
Page 41 and 42: Financial Statements 41
Page 43 and 44: Financial Statements 43 Income Stat
Page 45 and 46: Financial Statements 45 Statement o
Page 47 and 48: Financial Statements 47 Notes to th
Page 49 and 50: Financial Statements 49 The Bank co
Page 51 and 52: Financial Statements 51 2.19 Deposi
Page 53 and 54: Financial Statements 53 The interna
Page 55 and 56: Financial Statements 55 (e) Loans a
Page 57 and 58: Financial Statements 57 As at 31 De
Page 59 and 60: Financial Statements 59 3.6 Maturit
Page 61 and 62: Financial Statements 61 3.8. Capita
Page 63 and 64: Financial Statements 63 Loans and a
Page 65 and 66: Financial Statements 65 Movement in
Page 67 and 68: Financial Statements 67 Related par
Page 69 and 70: Financial Statements 69
Page 71: Contact Addresses 71 Ljubuški Kral

Annual Report 2008 - ProCredit Bank

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