8. Rules and the process of retail credit risk management
Credit risk management is realized by identification, assessment, acceptance, measurement and monitoring and credit risk control in scope of integrated system in whole credit cycle, consistent of all processes realized in Bank by reason of pursuing bank activity connected with giving credits, loans and other credit products. Rules of retail credit risk management are described in Retail Credit Risk Management Policy in ING Bank Śląski S.A.
The Bank regards all the retail receivables (from individual and entrepreneur clients) as individually non-significant as well as calculates and makes relevant charges and provisions pursuant to the collective approach.
The impairment calculation is based on the idea of incurred loss, which means that only those assets are provided, for which the objective evidences of impairment occurred (without recognition of losses expected as a result of future events).
If there exist objective evidences that the impairment loss on loan was incurred, the impairment provision equals the difference between the book value of given financial asset and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate.
Bank groups credit exposures into, so called, groups of exposures, according to similar characteristics of credit risk, which reflect ability of borrower to repay credit obligations according to credit agreement conditions. Bank distinguishes three basic groups of exposures (product segments):
- Consumer credits and loans – credits , loans, credit lines granted to individuals not aimed at conducting economic activity excluding mortgage credits and loans.
- Mortgage credits and loans – credits for housing purpose or secured by mortgage on housing real estate granted to individual person, payable in instalments, except of mortgage loan and mortgage line (payable in instalments since fixed moment, previously payment of interests).
- Credits and loans in Entrepreneurs segment – credits and loans granted to individual persons, legal persons or organizations, whom the legal act awards legal ability regarding conducting economic activity on their behalf with the aim connected with conducted economic activity. The Entrepreneurs group includes firms with annual net sales income not exceeding equivalent in polish currency of 1.2 mio EUR according to average exchange rate of National Polish Bank (according to Accounting Act) and total credit exposures on all credit products in Bank not exceeding 1.2 mio PLN.