GENERAL MEETING DRAFT - Bankier.pl

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>> Financial Statements
Part A – Accounting Policies
Doubtful loans are valued analytically when special elements make this advisable or by applying
analytically flat percentages on a historical or stochastic basis in the remaining cases.
� Restructured loans – exposure to borrowers with whom a rescheduling agreement has been
entered into including renegotiated pricing at interest rates below market, the conversion of part of
a loan into shares and/or reduction of principal: measurement is on a loan-by-loan basis, including
discounted cost due to renegotiation of the interest rate at a rate lower than the original
contractual rate.
� Past-due loans – total exposure to any borrower not included in the other categories, who at the
balance-sheet date has expired facilities or unauthorised overdrafts that are more than 90 days
past due. Retail loans to public-sector entities and companies resident or established in Italy are
considered impaired where there are overdue or unauthorized exposures for more than 180
instead of 90 days. Total exposure is recognised in this category if, at the balance-sheet date,
either:
o the expired or unauthorised borrowing;
or:
o the average daily amount of expired or unauthorised borrowings during the last preceding
quarter are equal to or exceed 5% of total exposure.
Overdue exposures are valued at a flat rate on a historical or stochastic basis by applying where
available the risk rating referred to LGD – Loss given Default under Basel 2.
Collective assessment is used for groups of loans for which individually there are no indicators of
impairment, but to which latent impairment can be attributed, inter alia on the basis of the risk factors in
use under Basel 2.
Each loan with similar characteristics in terms of credit risk – in relation to loan type, the borrower’s sector
of economic activity, geographical location, type of security or other relevant factors – is assessed in
terms of its PD (Probability of Default) and LGD (Loss Given Default); these are uniform for each class of
loan.
The procedure adopted supplements Basel 2 directives with IFRS, which do not include future losses on
loans and receivables which have not been sustained, but do take into account losses already sustained
but not manifest at the time of measurement, on the basis of past experience of losses on assets having a
similar credit risk to the assets being measured.
The average time elapsed from deterioration of borrowers’ financial condition to the recognition of
impairment losses, in relation to any homogeneous group of exposures, is the Loss Confirmation Period.
The portfolio valuation is the product of the risk factors used under Basel 2 (with a one-year time horizon)
and the above loss confirmation periods expressed as part of a year and diversified according to asset
class on the basis of the characteristics and development level of the credit processes.
If these indicators are not available, estimated value and standard loss percentages, based on internal
historical series and sectoral studies, shall be used.