Annual Report 2008 - ProCredit Bank

Financial Statements 55
(e) Loans and advances to customers
The Bank holds collateral against loans and advances to customers
in the form of mortgage interest over property, other securities
over assets and guarantees. Estimates of fair value of collateral are
based on the value of collateral assessed at the time of borrowing,
and generally are not updated except when a loan is individually assessed
as impaired. Collateral is not held over loans and advances
to banks and financial assets available for sale.
The breakdown of the gross amount of individually impaired loans
and advances by class, along with the fair value of related collateral
held by the Bank as security, are as follows:
Overdraft Housing Others Very SMEs Others
small
business
31 December 2008
Individually impaired loans – – – 26 2,571 –
Collectively impaired loans 937 16,291 11,806 145,522 122,210 19,203
Collateral 952 28,395 17,879 156,956 365,316 51,527
31 December 2007
Individually impaired loans – – – 27 2,060 –
Collectively impaired loans 804 12,702 6,149 172,931 109,929 12,443
Collateral 1,099 24,399 7,764 180,000 299,220 37,186
The disclosed value of collateral is determined by local chartered
surveyors and represents value estimated as realisable by the legal
owners of the assets. Management considers the loans covered by
collateral as impaired because experience shows that a significant
proportion of the collateral cannot be enforced due to administrative
and legal difficulties. The impairment provisions reflect the
probability that management will not be able to enforce its rights
and repossess collateral on defaulted loans.
As at 31 December 2008 the Bank did not have any repossessed
property or some other type of collateral.
3.1.6 Concentration of risks of financial assets with credit risk
exposure
The Bank monitors concentrations of credit risk by economic sector
and by geographic location. Credit portfolio risk is limited by
the Bank’s credit strategy; in particular the focus on small and very
small loans and the broad geographical and economic sector diversification
of the loan portfolio. An analysis of such concentrations
at the reporting date is shown below:
Economic sector risk concentrations
Wholesale Agriculture, Production Individuals Tourism, Other Total
and retail forestry catering
and fishing
Loans and advances to banks – – – – – 28,754 28,754
Loans and advances to customers
– Overdrafts – – – 911 – – 911
– Housing – – 422 15,592 – – 16,014
– Consumer – – – 11,573 – – 11,573
Loans to corporate entities:
– Very small business 20,665 77,374 5,675 3,413 2,745 28,249 138,121
– Small and medium size enterprises (SMEs) 60,256 2,427 24,318 5,982 7,819 21,562 122,364
– Business overdrafts 12,209 185 3,129 922 235 2,089 18,769
Financial investments available for sale – – – – – 196 196
Other assets – – – – – 2,949 2,949
As at 31 December 2008 93,130 79,986 33,544 38,393 10,799 83,799 339,651
As at 31 December 2007 88,091 92,721 32,952 25,324 10,976 66,407 316,471