Annual Report 2012 - National Savings Bank

114ASSESSING AND MANAGING OUR RISK FACTORSRISK MANAGEMENTIndustry wise Credit Exposures 2012 (based on SLFRS)56.2%0.4%0.1%7.9%25.5%5.5%4.4%number of customers and backed bymarketable securities.Credit QualityThe Bank has established a creditquality review process to provide earlyidentication of possible changes inthe credit worthiness of counterparties,including regular collateral revisions.Establishing industry acceptablecriteria for assessment of risk prole ofthe borrower and the facility helps tomonitor the overall quality of the totalcredit portfolio and mitigate any creditrisk.Agriculture and FishingTransportConstructionTradersNew EconomyBanksOthersAn analysis of the behaviour of NPLcategories shows a shift in portfoliocomposition evident of the efciencyand effectiveness of recovery actionstaken during the year for ‘Doubtful’ and‘Loss’ accounts.Stress TestingAn important element of maintainingcredit quality is analysing what couldpotentially go wrong with individualcredits and the overall credit portfolioif conditions/environment in whichborrowers operate change signicantly.Accordingly, the Risk & ComplianceDivision has stressed tested NPLS toidentify the deviations from the risktolerance under assumed scenarios.Such stress tests can reveal previouslyundetected areas of potential creditrisk exposure that could arise in timesof crisis.The results of this analysis should thenbe factored into the assessment of theLoan CategoryHHI HHI2011 2012Housing and Property Loans 0.15899 0.10165Loans against Deposits 0.02459 0.02446Loans to Government 0.00000 0.00210Loans to Government Institutions 0.00000 0.00052Development Finance Loans 0.00454 0.00268Pawning 0.12083 0.13069Personal 0.00030 0.00060Loans Granted Out of Investment Fund Account 0.00000 0.00007Others 0.00015 0.000090.30939 0.26288NATIONAL SAVINGS BANK . ANNUAL REPORT 2012