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Credit risk adjustments (impairment and impairment charges)

The Group’s strategy and policy applicable to impairment and recognizing impairment charges has been presented in the Yearly Financial Report, section 8 “Credit risk” in the part 8 devoted to financial risk management. It contains a detailed description of:

Organization of the process to identify and measure impairment of credit exposures in order to determine adjustments for specific and general credit risk
Analysis of individual impairment of credit receivables
Collective analysis of a credit portfolio

Exposures as at the end of 2016 and average amount in 2016 – without counterparty credit risk (PLN thous) +

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		Net value of exposures at the end of the period	Average net exposures over the period
1	Central governments or central banks	0	0
2	Institutions	0	0
3	Corporates	0	0
4	of which: Specialized lending	0	0
5	of which: SMEs	0	0
6	Retail	30 770 420	30 575 330
7	Secured by real estate property	27 836 378	27 729 745
8	* SME’s	20 602	5 627
9	* Non-SME’s	27 815 776	27 724 118
10	Qualifying revolving	2 934 042	2 845 585
11	Other retail	0	0
12	* SMEs	0	0
13	* Non-SMEs	0	0
14	Equity	0	0
15	Total IRB approach	30 770 420	30 575 330
16	Central governments or central banks	18 439 361	16 591 112
17	Regional governments or local authorities	373 653	424 813
18	Public sector entities	35 115	47 103
19	Multilateral development banks	79 246	59 996
20	International organizations	0	0
21	Institutions	1 670 559	2 147 263
22	Corporates	11 470 083	11 427 228
23	of which: SMEs	6 441 870	6 726 445
24	Retail	6 300 104	6 122 750
25	of which: SMEs	1 744 972	1 662 329
26	Secured by mortgages on immovable property	4 008	4 870
27	of which: SMEs	4 008	4 870
28	Exposures in default	1 130 107	821 629
29	Items associated with particularly high risk	45	1 077
30	Covered bonds	0	0
31	Claims on institutions and corporates with a short-term credit assessment	0	0
32	Collective investments undertakings	0	0
33	Equity exposures	43 154	136 161
34	Other exposures	1 517 892	1 436 848
35	Total standarized approach	41 063 326	39 220 849
36	Total	71 833 747	69 796 179

Exposures broken down in significant areas by material exposure classes – without counterparty credit risk (PLN thous.) +

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		European Union (EU)	Poland	Other EU countries	Other geographical areas	Total
1	Central governments or central banks	0	0	0	0	0
2	Institutions	0	0	0	0	0
3	Corporates	0	0	0	0	0
4	Retail	30 590 009	30 461 664	128 344	180 411	30 770 420
5	Equity	0	0	0	0	0
6	Total IRB approach	30 590 009	30 461 664	128 344	180 411	30 770 420
7	Central governments or central banks	18 439 361	18 236 928	202 432	0	18 439 361
8	Regional governments or local authorities	373 653	373 653	0	0	373 653
9	Public sector entities	35 115	35 115	0	0	35 115
10	Multilateral development banks	79 246	0	79 246	0	79 246
11	International organizations	0	0	0	0	0
12	Institutions	799 029	148 941	650 088	871 531	1 670 559
13	Corporates	11 470 083	11 469 773	309	0	11 470 083
14	Retail	6 216 949	6 207 557	9 393	83 154	6 300 104
15	Secured by mortgages on immovable property	4 008	4 008	0	0	4 008
16	Exposures in default	1 119 346	1 117 245	2 101	10 760	1 130 107
17	Items associated with particularly high risk	45	45	0	0	45
18	Covered bonds	0	0	0	0	0
19	Claims on institutions and corporates with a short-term credit assessment	0	0	0	0	0
20	Collective investments undertakings	0	0	0	0	0
21	Equity exposures	43 154	43 154	0	0	43 154
22	Other exposures	1 517 892	1 517 892	0	0	1 517 892
23	Total standarized approach	40 097 882	39 154 312	943 570	965 445	41 063 326
24	Total	70 687 890	69 615 977	1 071 914	1 145 856	71 833 747

Loan receivables and off-balance sheet exposures broken down by industries – without counterparty credit risk (PLN thous.) +

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Industry		On-balance sheet exposure	Off-balance sheet exposure	Total exposure
A	Agriculture	103 555	22 093	125 648
B	Mining	118 451	11 573	130 024
C	Processing industry	3 967 205	1 944 230	5 911 435
D	Generation and supply of electricity. gas. water	111 944	48 606	160 550
E	Supply of water; sewage and waste	99 006	31 580	130 586
F	Construction	914 176	713 737	1 627 913
G	Commerce and repairs	3 706 759	1 915 277	5 622 036
H	Transportation and warehousing	2 293 059	137 980	2 431 039
I	Hotels and restaurants	157 047	8 869	165 916
J	Information and communication	408 886	122 720	531 606
K	Financial and insurance business	144 745	115 805	260 550
L	Real estate administration	715 728	90 750	806 478
M	Other professional. scientific and technical activity	337 875	144 482	482 357
O	Public administration	308 447	80 810	389 257
P	Education	31 780	29 732	61 512
Q	Health care	161 927	62 784	224 711
R	Culture. recreation and entertainment	23 402	3 056	26 458
N+S	Other services	696 747	150 367	847 114
	Total	14 300 739	5 634 451	19 935 190

The Group has presented the distribution of the key receivables portfolio by the residual maturity for main exposure types: deposits and loans granted to banks and other monetary institutions (Note 15b to the Yearly Financial Report), loans and borrowings granted to customers (Note 18e to the Yearly Financial Report). (Art. 442.f).

Impaired and past-due exposures to significant industries, amounts written down from the balance sheet in connection with impaired charges in 2016 – without counterparty credit risk (PLN thous.) +

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Industry		Impaired balance-sheet exposures	Balance-sheet exposures > 4 days past due	Adjustments for general credit risk (IBNR)	Adjustments for specific credit risk (impaired)	Amounts written off from the balance sheet in 2015
A	Agriculture	16 413	18 053	452	12 779	227
B	Mining	2 211	5 036	728	1 005	527
C	Processing industry	179 440	206 198	26 961	95 870	12 361
D	Generation and supply of electricity. gas. water	707	1 008	500	428	97
E	Supply of water; sewage and waste	2 757	4 261	412	2 070	202
F	Construction	165 546	168 128	5 083	116 551	23 604
G	Commerce and repairs	170 916	270 536	19 111	92 898	9 418
H	Transportation and warehousing	52 286	189 231	10 394	28 951	6 592
I	Hotels and restaurants	35 898	15 025	815	13 596	121
J	Information and communication	12 477	13 986	1 902	9 057	115
K	Financial and insurance business	6 722	7 989	792	4 268	410
L	Real estate administration	67 670	88 187	4 285	13 751	104
M	Other professional. scientific and technical activity	37 077	17 054	1 447	31 337	570
O	Public administration	0	0	12	0	0
P	Education	2 033	4 912	527	1 236	59
Q	Health care	2 444	3 872	865	1 600	25
R	Culture. recreation and entertainment	2 511	3 282	192	1 747	80
N+S	Other services	43 743	59 209	2 373	18 329	6 647
	Total	800 851	1 075 967	76 851	445 473	61 159

At the same time, chapter VII.3 “Credit risk” of the Management Board Report on the Activity of the Bank/Group presents a general assessment of the credit risk level and assessment of changes in this respect observed during 2016 year, along with key asset quality indicators. It also presents an assessment of concentration levels in the credit portfolio, broken down into product types and industries.

The Group does not present information on impaired and past-due exposures broken down by significant geographical areas, due to immaterial exposures to counterparties having site in countries other than Poland. (Art. 442.h)

The agreed changes in the impairment and impairment charges are presented in the Notes (18.g) to the Yearly Financial Report. (Art. 442.i)

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Credit risk adjustments (impairment and impairment charges)

Exposures as at the end of 2016 and average amount in 2016 – without counterparty credit risk (PLN thous) +

Exposures broken down in significant areas by material exposure classes – without counterparty credit risk (PLN thous.) +

Loan receivables and off-balance sheet exposures broken down by industries – without counterparty credit risk (PLN thous.) +

Impaired and past-due exposures to significant industries, amounts written down from the balance sheet in connection with impaired charges in 2016 – without counterparty credit risk (PLN thous.) +