PA - Banco Security

121
PAGE
2.20 Provisions
- General
Provisions are recognized when:
- Grupo Security has a present obligation as a result of a past event,
- It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation,
- A reliable estimate can be made of the amount of the obligation.
- Vacation provision: Grupo Security records the cost for the concept of employee vacation on an accrual basis.
- Other provisions: These correspond to creditor balances covering present obligations at the date of the statement of financial
position arising past events from which actual explicit or implicit obligations can be derived in relation to their nature and which
their amount can be estimated.
- Provisions for assets at risk: The provisions required to cover the loan portfolio risk have been recognized according to the
standards of the SBIF. Assets are presented net of such provisions, while the provisions corresponding to contingent loans are
presented in liabilities.
To record loan provisions the Bank uses models or methods based on individual and group analysis of debtors. Such models
and methods are in conformity with the standards and instructions of the SBIF.
The financial statements of Grupo Security include all significant provisions, where the probability that the obligation will have to
be paid is greater than probable.
2.21 Bank Subsidiary, loans and accounts receivable from customers, allowance to loan leases, and write-offs
The loans and accounts receivable from customers issued by the Bank and acquired are non-derivative financial assets, with fixed or
determinable payments that are not quoted on an active market and for which the Bank has no intention to sell these immediately in
the short term. These loans are measured initially at fair value plus the incremental costs of the transaction and subsequently these are
measured at their amortized cost as per the effective interest method.
Impaired portfolio: The impaired loan portfolio includes those loans where there is concrete evidence that debtors will default by failing
to make any of the contractual payments - regardless of the possibility of collecting the amounts due by going after the debtor’s
collateral - through the exercise of legal collection actions or by agreeing on different repayment conditions.
As per the above, the Bank will maintain the loans in the impaired portfolio until the Bank observes a normalization of the loan’s
payment capacity or behavior, without detriment to the fact that it will proceed to the write-off of the individual loan.
a) Allowance for loan losses for individual evaluation
In order to assess allowances for normal risk debtors classified under A1, A2, A3 and B, the Bank uses the provision percentages
approved by the Board. In addition, for C1, C2, C3, C4, D1 and D2 debtors, the following levels of allowances were assessed according
to regulations: