notes to the consolidated financial statements - Sacombank

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2011
Group 3: Sub-standard
n Undue commitments which, according to the Group’s assessment, could not be fully settled when they fall due;
n Due commitments which are overdue for less than 30 days
Group 4: Doubtful
n Undue commitments which, according to the Group’s assessment, could not be fully settled when they fall due;
n Due commitments and contingencies which are overdue from 30 days to 90 days
Group 5: Bad
n Undue commitments which, according to the Group’s assessment, could not be fully settled when they fall due;
n Due commitments which are overdue for more than 90 days
Provision for losses on credit commitments
The determination of specific provision for losses on credit commitments is calculated using set rates applied to each group
of credit commitments as follows:
Group 1 - Current
Provision rates
0%
Group 2 - Special mentioned 5%
Group 3 - Sub-standard 20%
Group 4 - Doubtful 50%
Group 5 - Bad 100%
The specific provision is calculated based on net credit exposure of each customer which equals to credit commitment
balance as at 30 November less value of collateral assets. The value of these assets is determined in accordance with
Decision 493/2005/QD-NHNN and Decision 18/2007/QD-NHNN.
In accordance with the Decision 493/2005/QD-NHNN dated 22 April 2005, a general provision is also required and should
be equal to at least 0.75% of total balance of guarantees, loan commitments and settlement acceptances and excluding
guarantees and commitments which are classified as bad.
2.9 Investments
(i) Trading securities
Trading securities are securities held for trading and are acquired principally for the purpose of selling in the short-term or if
so designated by Management.
Trading securities are initially stated at cost of acquisition. Subsequently, they are measured at cost less provision.
Provision is made for trading securities eligible for being freely traded in the market and where there is a diminution in
value of these securities.
103 ANNUAL REPORT 2011
Form B 05/TCTD - HN