Annual Report 2010 - ProCredit Bank

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58 Annual Report 2010 Each branch/agency is required to implement Bank’s credit policies and procedures. Each branch is responsible for the quality and performance of its credit portfolio and for monitoring and controlling all credit risks in its portfolios, including those subject to central approval. Regular audits of branches/agencies and Bank credit processes are undertaken by Internal Audit. The Credit Control Department also conducts reviews in order to assess the compliance with lending procedures at the level of each branch, to assess the quality of risk assessments for very small, small and private individual exposures and to assess the quality of the loan portfolio at branch level. The Bank monitors the quality of the loan portfolio on an ongoing basis, using a portfolio at risk definition that includes all exposures with payments overdue by more than 30 days as the basic measure of current portfolio quality. The Bank chooses this measure because the vast majority of all loans have fixed instalments with monthly payment of principal and interest. Exceptions are credit lines, overdraft facilities, seasonal agricultural loans and investment loans, which have a grace period of six months. At 31 December 2010 portfolio at risk stood at 5.4% (as compared to 3.5% in 2009). The Bank’s primary exposure to credit risk arises through its lending activity. The amount of credit exposure in this regard is represented by the carrying amounts of the assets on the balance sheet. In addition, the Bank is exposed to off balance sheet credit risk through commitments to extend credit and guarantees issued (see Note 29). Concentrations of credit risk that arise from financial instruments exist for groups of counterparties when they have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions. The major concentrations of credit risk arise by individual counterparty and by type of customer in relation to the Bank’s loans and advances to customers (see Note 17). ii. Exposure to credit risk in EUR Loans and advances to customers Loans and advances to banks Investments securities Assets at amortised cost Individually impaired 31.12.2010 31.12.2009 31.12.2010 31.12.2009 31.12.2010 31.12.2009 0 days in arrears 1,266,318 982,746 – – 1-30 days in arrears 1,070,450 50,769 – – 31-90 days in arrears 676,840 337,952 – – – – 91-180 days in arrears 591,574 328,733 – – – – over 180 days in arrears 2,504,885 823,876 – – – – Gross amount 6,110,067 2,524,076 – – – – Allowance for impairment (1,168,213) (379,926) – – – – Carrying amount 4,941,854 2,144,150 – – – – Collectively impaired 0 days in arrears 162,078,946 167,140,027 1-30 days in arrears 4,621,679 6,731,337 31-90 days in arrears 2,651,025 2,550,166 – – – – 91-180 days in arrears 2,668,700 1,893,070 – – – – over 180 days in arrears 536,929 403,485 – – – – Gross amount 172,557,279 178,718,085 – – – – Allowance for impairment (6,973,048) (6,438,636) – – – – Carrying amount 165,584,230 172,279,450 – – – Past due but not impaired – – – – – – Carrying amount Neither past due nor impaired – – – – – – Carrying amount – – 991,920 1,535,027 86,305 87,460 Carrying amount - amortised cost 170,526,084 174,423,600 991,920 1,535,027 86,305 87,460 Available-for-sale assets Neither past due nor impaired Carrying amount – – – – 3,480,127 9,411,905 Carrying amount - fair value – – – – 3,480,127 9,411,905 Total carrying amount 170,526,084 174,423,600 991,920 1,535,027 3,566,432 9,499,365 As at 31 December 2010 the Bank has in balance rescheduled loans with a gross outstanding amounting to EUR 14,782,709 (31 December 2009: EUR 6,758,150) and related provisions amounting to EUR 2,982,807 (31 December 2009: EUR 829,570). Impaired loans and securities Impaired loans and securities are loans and securities for which the Bank determines that it is probable that it will be unable to collect all principal and interest due according to the contractual terms of the loan / securities agreements. Where contractual interest or principal payments are past due by over 30 days the loans are considered impaired and assessed individually for exposures
higher than EUR 30,000. These loans are graded 2-4 in the Bank’s loan loss provision methodology. However, if a loan was restructured and the restructuring led to a decrease of the interest rate, all loans granted to the respective client will be classified as impaired, regardless of the arrears level. Past due but not impaired loans Loans and securities where contractual interest or principal payments are past due but the Bank believes that impairment loss is not appropriate on the basis of the level of security / collateral available and / or the stage of collection of amounts owed to the Bank. Allowances for impairment The Bank establishes an allowance for impairment losses that represents its estimate of incurred losses in its loan portfolio. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loan loss allowance established for groups of homogeneous assets in respect of losses that have been incurred but have not been identified on loans subject to individual assessment for impairment (refer to Note 3 (h) (vii) and Note 5). Write-off policy The Bank writes-off a loan / security balance (and any related allowances for impairment losses) when it determines that the loans / securities are uncollectible. This determination is reached after considering information such as the number of days in arrears. A loan is considered uncollectible when it has more than 180 days in arrears for loans with principal outstanding amounts plus accrued interests less unamortised fee (amortized cost) below equivalent EUR 10,000 or if it has more than 360 days in arrears for loans with amortised cost greater than equivalent EUR 10,000 but up to EUR 30,000. For loans with amortised cost higher than EUR 30,000 the write off would be performed after 360 days of arrears. For these loans in case of pending court transactions, i.e. if it is probable that the loan will be finally recovered via the execution of collateral the item will be kept on the balance sheet. Credit Risk Department (in case the legal execution did not start) or Legal Recovery (in case the legal execution was initiated) will make the proposal for writing off (for loans whose amortised cost > EUR 30,000 equivalent) to Bank’s Managers who will decide upon it. Collateral The Bank holds collateral against loans and advances to customers in the form of pledge over cash deposits, mortgage interests over property, guarantees and other pledge over equipments and/or receivables. Estimates of fair value 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, except for mortgage interests over property which are reassessed yearly. Collateral generally is not held over loans and advances to banks. According to the Counterparty Risk Management Policy and Strategy, the only type of eligible collateral for these exposures is cash deposits. Collateral usually is not held against investment securities, and the Bank did not have such exposures as of 31 December 2010 or 2009. An estimate of the total value of collateral and other security enhancements held against financial assets is shown below: Loans and advances to customers Loans and advances to banks in EUR Against individually impaired 31 December 2010 31 December 2009 31 December 2010 31 December 2009 Mortgages 5,662,897 1,202,001 – – Personal guarantees 3,588,677 1,424,541 – – Inventories 806,294 189,621 – – Others – – – – Against collectively impaired Financial Statements 59 Mortgages 160,776,403 145,533,854 – – Personal guarantees 152,004,606 273,356,788 – – Inventories 44,216,749 42,173,862 – – Others 500,089 288,860 – – Total 367,555,717 464,169,527 – – The Bank’s credit portfolio risk is naturally limited by the credit strategy resulting from the business model; in particular the focus on small and very small loans and denominated mostly in RON show the distribution of loan portfolio by loan destination for 31 December 2010: in EUR Working capital Agriculture Housing Consumer Other Total Less than EUR 10,000 27,540,100 20,658,688 2,681,297 293,627 616,248 51,791,959 EUR 10,000 to 30,000 28,104,548 8,192,321 996,421 687,918 325,994 38,307,202 EUR 30,000 to 150,000 37,971,247 8,154,211 780,071 217,878 216,050 47,339,457 More than EUR 150,000 27,635,785 5,200,208 103,394 148,078 – 33,087,466 Total 121,251,680 42,205,427 4,561,183 1,347,502 1,160,291 170,526,084
Page 1 and 2:
Annual Report 2010
Page 3 and 4:
Contents 3 Mission Statement 4 Lett
Page 5 and 6:
Letter from the Board of Administra
Page 7 and 8: Commerzbank is Germany’s leading
Page 9 and 10: The Bank and its Shareholders 9
Page 11 and 12: entrepreneurs to better manage thei
Page 13 and 14: Political and Economic Environment
Page 15 and 16: maintain relationships with potenti
Page 17 and 18: Business Loan Portfolio - Breakdown
Page 19 and 20: Domestic Money Transfers Volume (in
Page 21 and 22: Management Business Review 21
Page 23 and 24: position to detect risks and take t
Page 25 and 26: sometimes engages in transactions w
Page 27 and 28: NRA process does management give it
Page 29 and 30: where they could make the greatest
Page 31 and 32: outside Romania at the internationa
Page 33 and 34: These six values represent the back
Page 35 and 36: The ProCredit Group: Responsible Ne
Page 37 and 38: The ProCredit Group: Responsible Ne
Page 39 and 40: Switzerland Germany Italy Czech Rep
Page 41 and 42: Name ProCredit Bank Albania ProCred
Page 43 and 44: Rodica and Ciprian Lazar, Producers
Page 45 and 46: Mr. Valeriu Dacius Masalar, 35, sta
Page 47 and 48: Financial Statements 47
Page 49 and 50: Statement of Financial Position As
Page 51 and 52: Statement of Cash Flows For the yea
Page 53 and 54: assets and liabilities denominated
Page 55 and 56: In assessing collective impairment
Page 57: Given the nature of the Bank’s op
Page 61 and 62: The following table shows the inter
Page 63 and 64: maintain a balance between continui
Page 65 and 66: Compliance with Bank standards is s
Page 67 and 68: 6. Financial assets and liabilities
Page 69 and 70: Deferred taxes The deferred tax ass
Page 71 and 72: Operating leases Non-cancellable op
Page 73 and 74: 26. Reserves In EUR 31 Dec 2010 31
Page 75 and 76: Financial Statements 75
Page 77 and 78: Baia Mare Branch 9 Unirii Blvd. Bai
Page 79: Contact Addresses 79
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Annual Report 2010 - ProCredit Bank

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