Annual Report 2012

Notes to the financial statements(Expressed in millions of RMB, unless otherwise stated)63 Risk Management (continued)(1) Credit risk (continued)(h) Distribution of debt securities investments analysed by rating (continued)Bank (continued)2011Unrated AAA AA A Lower than A TotalIndividually assessed and impairedgross amount– Policy banks – – – 45 – 45– Banks and non-bank financialinstitutions 753 11 199 5,615 9,142 15,720– Public sector entities 125 – – – – 125– Other enterprises 312 2,818 – – 311 3,4411,190 2,829 199 5,660 9,453 19,331Allowances for impairment losses (8,674)Subtotal 10,657Neither overdue nor impaired– Government 889,890 2,574 6,729 473 83 899,749– Central banks 429,101 1,738 2,187 – – 433,026– Policy banks 285,340 – – 130 – 285,470– Banks and non-bank financialinstitutions 645,200 32,953 13,638 4,948 2,519 699,258– Cinda 131,761 – – – – 131,761– Public sector entities – 63 87 – 65 215– Other enterprises 674 233,532 5,010 2,930 1,445 243,5912,381,966 270,860 27,651 8,481 4,112 2,693,070Allowances for impairment losses (1,320)Subtotal 2,691,750Total 2,702,407(i)Credit risk arising from the Group’s derivatives exposuresThe majority of the Group’s derivatives transactions with domestic customers are hedged back-to-back with overseas banksand non-bank financial institutions. The Group is exposed to credit risk both in respect of the domestic customers and theoverseas banks and non-bank financial institutions. The Group manages this risk by monitoring this exposure on a regularbasis.(j)Settlement riskThe Group’s activities may give rise to settlement risk at the time of the settlement of transactions and trades. Settlement risk isthe risk of loss due to the failure of an entity to honour its obligations to deliver cash, securities or other assets as contractuallyagreed.For certain types of transactions, the Group mitigates this risk by conducting settlements through a settlement or clearingagent to ensure that a trade is settled only when both parties have fulfilled their contractual settlement obligations.China Construction Bank Corporation annual report 2012183