About report

For the second time now, the ING Bank Śląski S.A. Group has compiled the annual report in line with the best global practices of integrated reporting. To help readers use the interactive tools, we prepared a user guide with key features. We encourage you to watch a short animated video before reading the report.

zamknij
PL ENG A wersja-kontrastowa informacja
Brak notatek
Basket is empty
Send to print
Delete

We understand credit risk as:

  • the risk of incurring a financial loss by the Bank due to a debtor’s failure to perform their obligations towards the Bank under credit exposure in full and when
  • the risk of lowering the economic value of credit exposure or a group of credit exposures due to deterioration of the debtor’s capacity to service their debt as agreed.
In bank operations, skilful credit risk management is of particular importance. It is impossible to completely eliminate the credit risk, but it can be mitigated. That is why it is important to seek state-of-the-art risk management methods taking account of the scale and nature of the business. The better the risk management, the lower the risk costs. Our Bank policy is based on the principles of safe and prudent credit risk management.
Agnieszka Śliwińska
Credit Risk Policy Expert

The Bank’s policy on the risk of credit exposure portfolio factors in the fact that the business generating credit risk can entail other risks as well. These are liquidity risk, market risk, operational risk, environmental risk, social risk, legal risk and reputational risk which may intensify one another.

Lending-related losses are a consequence of the above risks and the Bank’s mitigation actions in that regard. The Bank impacts the loss level using accepted risk limits, risk exposure amounts plus risk hedging instruments and in case the risk materializes, by direct actions reducing the losses.

Our primary goal in the credit risk management process is to support effective accomplishment of business goals through proactive risk management and organic growth-oriented activities, with:

  • solvency and liquidity kept at a safe level and provisions retained at a proper level, and
  • legal and regulatory compliance ensured.

We manage credit risk end to end based on:

  • strategic planning,
  • a consistent system of limits, policies and procedures as well as
  • the risk management tools, including risk identification, measurement and control.

This integrated system combines all the lending-related processes at our Bank.

Detailed credit risk management objectives are:

  • supporting business initiatives,
  • keeping credit losses at the assumed level,
  • verifying and assessing the adequacy and development of applied procedures, models and other elements of the risk management system on an ongoing basis,
  • adapting business to the changing environment,
  • keeping adequate capital requirements for credit risk and provisions, and
  • ensuring regulatory compliance.

Risk management strategy and risk appetite parameters

We treat credit risk management as a fundamental and integral part of the end-to-end Bank management process. Setting the Risk Appetite Statement strategy and parameters as well as monitoring of their delivery are key elements of the risk management process.

The credit risk management strategy supports delivery of business goals while maintaining safe solvency and liquidity of the Bank and adequate provisions. We define the strategy to warrant optimum development of the lending portfolio while keeping adequate quality and profitability of credit operations and capital allocation. The primary objective of the credit risk management strategy is to optimise the ratio of risk to ROE, considering the information about the current and prospective macroeconomic landscapes, the Bank’s portfolio and RAS limits utilisation.

The credit risk management strategy sets out short-, mid- and long-term goals as well as their accomplishment manner. It factors in the outlook, including the need to keep the Bank’s offer competitive and attractive while expanding it.

The RAS stands for the risk appetite of the Bank. We define it by setting high-level and specific limits. Setting and monitoring of the risk appetite (RAS parameters) is an integral part of the planning process and concentration risk management at the Bank.

RAS limits on credit risk:

  • portfolio limits,
  • limits on portfolio and new production risk parameters, and
  • concentration limits, including limits on mortgage-backed credit exposures under PFSA Recommendation S.

Besides RAS limits, we set at the Bank credit risk limits for individual areas, business lines and products as well as transactional limits which are accepted by the competent credit approver. Further, we set internal concentration limits on the sectors and collateral accepted and monitor on an ongoing basis the concentration in the geographical areas of our business. We monitor and report the current utilisation of RAS limits during the year, on a monthly basis.

The credit risk management strategy supports delivery of business goals while maintaining safe solvency and liquidity of the Bank and adequate provisions. We define the strategy to warrant optimum development of the lending portfolio while keeping adequate quality and profitability of credit operations and capital allocation. The primary objective of the credit risk management strategy is to optimise the ratio of risk to ROE, considering the information about the current and prospective macroeconomic landscapes, the Bank’s portfolio and RAS limits utilisation.

The credit risk management strategy sets out short-, mid- and long-term goals as well as their accomplishment manner. It factors in the outlook, including the need to keep the Bank’s offer competitive and attractive while expanding it.

The RAS stands for the risk appetite of the Bank. We define it by setting high-level and specific limits. Setting and monitoring of the risk appetite (RAS parameters) is an integral part of the planning process and concentration risk management at the Bank.

RAS limits on credit risk:

  • portfolio limits,
  • limits on portfolio and new production risk parameters, and
  • concentration limits, including limits on mortgage-backed credit exposures under PFSA Recommendation S.

Besides RAS limits, we set at the Bank credit risk limits for individual areas, business lines and products as well as transactional limits which are accepted by the competent credit approver. Further, we set internal concentration limits on the sectors and collateral accepted and monitor on an ongoing basis the concentration in the geographical areas of our business. We monitor and report the current utilisation of RAS limits during the year, on a monthly basis.

Non-bank corporate banking portfolio structure – BS and off-BS exposures (PLN million) ING Bank Śląski S.A. Group

Credit risk management process

Credit risk management is a constant process. It encompasses all lending activities of the Bank. All units and employees performing tasks in the lending process cooperate closely with one another to:

  • make the risk management process more efficient and
  • keep risk at the level set in the strategy, risk appetite and financial plans of the Bank as well as in the approved RAS.

At our Bank, the credit risk management process is carried out within three lines of defence which are independent in organisational and functional terms from one another.

Business and operational units of the Bank. They pursue day-to-day business under the approved lending policy and risk limits.

  • Credit risk. It identifies and measures the risk stemming from the commercial operations on an ongoing basis and controls its materialisation within the approved risk parameters.
  • Credit inspection. It conducts an unbiased assessment of efficiency, adequacy and effectiveness of the actions taken in the lending process and their complince with the internal regulations of the Bank.

Internal audit that conducts a detailed periodical verification ofcompliance of the actions of the 1st and 2nd lines of defence with the regulatory requirements and best banking standards.

Business and operational units of the Bank. They pursue day-to-day business under the approved lending policy and risk limits.

  • Credit risk. It identifies and measures the risk stemming from the commercial operations on an ongoing basis and controls its materialisation within the approved risk parameters.
  • Credit inspection. It conducts an unbiased assessment of efficiency, adequacy and effectiveness of the actions taken in the lending process and their complince with the internal regulations of the Bank.

Internal audit that conducts a detailed periodical verification ofcompliance of the actions of the 1st and 2nd lines of defence with the regulatory requirements and best banking standards.

At the Bank, we apply the organisational solutions which account for separation of the bank products sales forces from the risk acceptance ones across the organisational structure, the Bank Management Board included. We keep separation of the function of credit exposure risk (concentration risk included) control and monitoring from the bank products sales forces and the risk acceptance ones at all layers of the organisational structure of the Bank below the Management Board; for retail credit exposures – at the Bank Management Board level too.

For fast-track, automated lending paths, we base separation of bank products sales forces from the credit exposure risk acceptance ones on the independence of the process of development and validation of risk acceptance process assisting tools from the sales and operational functions. The credit approval authorities pertaining to individual credit transactions are isolated from the credit approval authorities involved in the formulation of the lending policy and credit risk management rules.

Credit risk management framework

Within the Risk Division, the Bank isolated two credit risk areas reporting to the Bank Executive Directors:

  • Credit Risk – Risk Policy, Modelling and Reporting, composed of:
    • Credit Risk Policy Department,
    • Credit Risk Systems Department,
    • Credit Risk Modelling Department,
    • Credit Risk Regulation Team, and
    • Credit Risk Reporting Team.
  • Credit Risk – Transactional Credit Risk, composed of:
    • Central Credit Risk Department,
    • Regional Credit Risk Department and,
    • Counterparty Credit Risk position.

Each of the abovementioned areas exercises control and supervision over the respective area of the Bank’s operations and risk management process.

For retail and corporate lending portfolios, the functions of credit risk policy, modelling and reporting are combined within relevant departments. In that way, consistent credit risk management actions are taken for both portfolios.

List of units engaged in the risk management process

Main tasks of Risk Division units reporting to Bank Executive Directors

All units and employees performing tasks within the Risk Division cooperate closely with one another to make the risk management process more effective and keep risk at the level set in the strategy, risk appetite and financial plans of the Bank.

  • consults sales units of the Bank on credit risk,
  • cooperates with sales units of the Bank to develop optimum transaction structures as well as ensure optimum content and quality of lending packages,
  • analyses risk, advises upon transactions and takes credit decisions,
  • verifies and accepts client risk ratings, also in the appeal procedure,
  • monitors credit risk exposures through verification of:
    • satisfaction of initial terms of lending,
    • instances of approved limited overrunning,
    • financial standing of clients,
    • repayment discipline,
    • satisfaction of contractual terms and collateral,
  • is engaged in the Watch List portfolio handling process, identifies clients with worse risk profile, including irregular clients, and approaches them adequately,
  • exercises functional control for the credit risk processes,
  • ensures risk-related advisory services in the credit approval process,
  • recommends and advises on changes to the lending process, product area and lending policy,
  • accepts the credit risk and rating for the transactions with corporate and strategic clients,
  • manages credit risk associated with client funding by: ensuring risk-related advisory services in the credit decision-taking process, enforcing implementation of credit decisions, recommending requisite changes to the lending process management,
  • ensures relevant data for the lending policy rules, processes and procedures to approve the acceptable client risk level,
  • raises awareness of credit risk and counterparty risk among Bank employees,
  • recommends and advises on changes to the lending process management and definition of products and lending policy.
  • consults sales units of the Bank on credit risk,
  • cooperates with sales units of the Bank to develop optimum transaction structures as well as ensure optimum content and quality of lending packages,
  • analyses credit risk, advises upon transactions and takes credit decisions,
  • verifies and accepts client risk ratings, also in the appeal procedure,
  • handles the logistics of the decision-making process at regional levels, engaging credit approvers from Risk in the said process,
  • participates in monitoring of credit exposures, i.e.:
    • monitoring of client financial standing, repayment discipline and satisfaction of other credit conditions in the collateral monitoring,
    • and also in the identification of worse risk profile clients and approaching them in a competent manner.
  • manages the quality of credit risk processes for the dedicated portfolio, inter alia:
    • has the role of the centre of excellence as regards credit analysis and risk assessment,
    • sees to quality of credit applications and runs adequate training courses,
    • monitors the quality of the credit decision-making process,
  • is engaged in the Watch List portfolio handling process, identifies clients with worse risk profile, including irregular clients, and approaches them adequately,
  • exercises functional control for the credit risk processes,
  • recommends and advises on changes to the lending process management, definition of products and lending policy.
  • oversees observance of counterparty limits and transactions by authorised Bank units and external units supervising the Bank,
  • oversees FM transaction hedge management process,
  • advises on and defines risks associated with the Bank’s FM operations and transactions where the Bank serves financial institutions and banks,
  • advises on and defines risks associated with the Bank’s FM operations and transactions where the Bank serves financial institutions and banks,
  • collaborates with dedicated Bank units as regards definition of the processes used to process transactions made by counterparties via the Bank,
  • analyses risks, advises on transactions in the credit approval process and on documents for the transactions made by financial institutions and banks,
  • verifies and accepts counterparty risk ratings.
  • formulates the credit risk management policy and oversees its implementation in order to ensure controlled, in terms of risks, development of the Bank’s lending activity,
  • develops and implements the policies and procedures on credit risk management, including credit risk assessment standards and principles for all Bank clients,
  • develops guidelines for lending directions and sectorial guidelines based on the conclusions from the portfolio analyses and the analyses of the economic environment (both macroeconomic and sector ones),
  • promotes awareness of credit risk and its control options and methods among the Bank employees.
  • builds and develops the tools and systems supporting credit risk management,
  • implements credit risk models, including models for establishing provisions for impairment losses and models for estimation of capital requirements for credit risk,
  • raises awareness of credit risk, and particularly of its control and measurement methods, among the Bank employees.
  • formulates the methodologies for building and monitoring regulatory credit risk models (including for stress testing purposes) which agree with the regulatory requirements and in-house standards of the Bank and ING Group,
  • formulates the methodologies for building and monitoring decision-taking models for credit risk used to support risk assessment and boost the sale of bank products,
  • regularly monitors regulatory and decision-taking models for credit risk,
  • seeks new modelling methods and techniques to improve model performance and the capacity to make advanced analyses using large databases, among other sources,
  • cooperates with the Model Validation Department, internal and external auditors and relevant organisational units of ING Group on regulatory and decision-taking models for credit risk and on maintenance of permanent compliance of their development and monitoring methodology and the model management rules with the regulatory regulations and ING standards.
  • oversees and controls the credit risk management policy implementation at the Bank in order to ensure development of the Bank’s lending in terms of risks,
  • identifies the areas of the Bank’s business operations, which impact the credit risk profile,
  • identifies gaps within business processes, which may adversely impact the Bank’s credit risk profile,
  • initiates actions aimed at maintaining the assumed parameters concerning the quality of the lending portfolio,
  • supervises effective implementation of the credit risk management policy,
  • assesses and adjusts the solutions used in credit risk management, lending products and business practice to requirements resulting from:
    • the credit risk management policy,
    • laws
    • regulatory regulations, recommendations and instructions of regulators,
    • the good practices and standards of the Bank and ING Group,
  • co-operates with internal and external auditors, bank regulators, Polish Bank Association and relevant organisational units of ING Group as regards:
    • the credit risk management policy and
    • maintenance of permanent compliance of the Bank’s regulations with the regulatory regulations and ING standards,
  • prepares annual self-assessment of the Bank concerning compliance with the supervisory regulations for the AIRB Approach,
  • mans the Credit Policy Committee secretary’s office.
  • develops credit risk reporting principles,
  • performs tasks regarding credit risk measurement and reporting including calculation of impairment losses using a collective method and of capital requirements for credit risk,
  • develops and maintains the tools and systems supporting credit risk management,
  • performs Stress Tests complying with the regulatory requirements and Bank and ING Group internal standards as well as compiles reports on model management process (e.g. automatic monitoring),
  • plans and forecasts the level of impairment losses using a collective method and as per the capital requirements for credit risk,
  • makes relevant report-based assessments of the credit risk monitoring process,
  • cooperates with the auditor, bank regulators, Polish Bank Association and relevant ING Group organisational units as regards credit risk reporting,
  • cooperates with the Credit information bureau and other providers of external databases used for credit risk management.

Information on lending principles, credit risk management, risk management system were discussed in 2017 Consolidated Financial Statement of ING Bank Śląski S.A. Group on page 141.

Lending portfolio quality

Share of impaired receivables

In 2017, the quality of our lending portfolio deteriorated slightly from the 2016 yearend. The share of impaired loans at the ING Bank Śląski S.A. Group went up from 2.6% in December 2016 to 2.8% as at 2017 yearend. Impaired loans at the Group were worth PLN 2,496.9 million versus PLN 2,076.8 million as at 2016 yearend (up by 20.2%). The quality of lending portfolios of our Bank is significantly better than the average in the entire banking sector. 

Share of impaired loans for ING Bank Śląski S.A. Group versus sector average1

1NBP data-based estimates.

 

At the yearend, the share of impaired receivables was 5.9% in the sector.

Important is the fact that both our loans in the retail segment and in the corporate segment are of a higher credit quality than the relevant averages for the entire banking sector. As at 2017 yearend, the share of impaired loans in the retail segment at the ING Bank Śląski S.A. Group stood at 1.9% vis-à-vis 6.1% for the sector. Analogical corporate segment ratios are 3.5% for the ING Bank Śląski S.A. Group and 5.6% for the entire sector.

1NBP data-based estimates.

1NBP data-based estimates.

In 2017, the quality of our lending portfolio was impacted, apart from the higher business volumes and the prudent lending policy, by four sale transactions of receivables classified as impaired loans or receivables derecognised from the balance sheet. Three corporate transactions impacted the ratios the most. The corporate receivables sold (principal, interest, other costs as at the agreement date) totalled PLN 136.5 million, out of which PLN 102.1 million represented the receivables forming the credit exposure. The fourth transaction concerned the retail segment. The retail receivables sold totalled PLN 101.3 million, out of which PLN 69.4 million represented the receivables forming the credit exposure.

Impaired loan portfolio coverage

As at the end of December 2017, the ING Bank Śląski S.A. Group had PLN 1,424.7 million worth of provisions for the impaired lending portfolio. The impaired portfolio provisioning ratio was 57.1%.

 

Impaired portfolio provisioning ratio

 

Risk costs

2017 saw a y/y growth in the risk costs margin ratio (net loan loss provisions to the gross lending portfolio) due to a higher ratio in the corporate segment.

For more information about the risk costs, see Chapter “Our financial results”

 

The main modifications of the Bank’s lending policy in 2017 were as follows

In 2017, the lending policy of the Bank was modified so as to ensure proper and stable functioning and continuous improvement of the credit risk management system in the changing legal, economic and business landscape. Ensuring policy compliancewith the approved credit risk appetite was the primary objective. The modifications took account of Poland’s overall economic situation and the financial standing of individual groups of borrowers, among other factors.

They served to:

  • further make the lending process more effective while ensuring adequate credit risk identification, measurement and control mechanisms,
  • make the lending offer of the Bank more attractive for clients on the assumption that the Bank’s credit risk is maintained at an acceptable level,
  • adapt the internal regulations of the Bank to the changes in the legal landscape,
  • further develop credit risk reporting and monitoring systems to support fast and effective risk identification and measurement,
  • further enhance active sectorial policy management through:
    • quarterly reviews of the individual sector situations and
    • diversification of lending policy principles on the basis of client qualification to pre-defined industry risk groups (preferred, neutral, under watch, and non-preferred industries).
  • we introduced credit commitment letters for EU subsidy award in the entrepreneurs segment,
  • we adjusted the lending policy of the Bank to the new Mortgage Loan Act,
  • we updated algorithms and criteria for classification of clients to automated lending process paths, i.a. in the following fields:
    • process of granting exposures, renewals and annual reviews,
    • automated client verification in external databases,
  • we broadened the catalogue of standard covenants and collateral agreements of credit documents,
  • we finished the pilot programme of monitoring of corporate clients (mid and big companies) using the Early Warning Signals statistical model,
  • we tailored internal regulations of the Bank to new IFRS 9-based accounting standards which took effect on 1 January 2018.
  • current PD/LGD/EAD models applied for the purpose of provision computation were adjusted to requirements of the new IFRS 9,
  • we redeveloped and implemented in the decision-taking process new Basel models for mortgage loans,
  • we approved a new application model in the credit approval process for the entrepreneurs segment,
  • we adjusted tools and methodologies and we ran the PFSA Recommendation C-compliant stress tests for concentration risk.
  • we introduced credit commitment letters for EU subsidy award in the entrepreneurs segment,
  • we adjusted the lending policy of the Bank to the new Mortgage Loan Act,
  • we updated algorithms and criteria for classification of clients to automated lending process paths, i.a. in the following fields:
    • process of granting exposures, renewals and annual reviews,
    • automated client verification in external databases,
  • we broadened the catalogue of standard covenants and collateral agreements of credit documents,
  • we finished the pilot programme of monitoring of corporate clients (mid and big companies) using the Early Warning Signals statistical model,
  • we tailored internal regulations of the Bank to new IFRS 9-based accounting standards which took effect on 1 January 2018.
  • current PD/LGD/EAD models applied for the purpose of provision computation were adjusted to requirements of the new IFRS 9,
  • we redeveloped and implemented in the decision-taking process new Basel models for mortgage loans,
  • we approved a new application model in the credit approval process for the entrepreneurs segment,
  • we adjusted tools and methodologies and we ran the PFSA Recommendation C-compliant stress tests for concentration risk.

I am a client

I am a staff member

I represent the market and media

ustawienia
zamknij

Change currency to:

Change :

zamknij

Search results: