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Credit risk

Credit risk is the risk assumed by the Group under credit transactions and resulting in its inability to recover the amounts disbursed, loss of income or a financial loss. Its level is affected among others by quality of development and launch of a loan product, loan granting process and measures reducing the probability of losses. The Group’s credit risk includes both counterparty and settlement risk.

NPL 8,9%
+ 1,9 p.p. y/y

When developing its current credit risk management policy, the Group aims to maintain the risk appetite level, i.e. NPL, NPL cover ratio and the vintage curve. Other factors taken into account include maintaining an appropriate level of equity, compliance with the credit limits set by the Group, analyzing both strengths and weaknesses of the Group’s lending process and anticipating the opportunities and threats for its further growth. The Group’s acceptable credit risk policy also takes into account cyclicality of economic processes and changes in the credit portfolio itself.

The following principles have been adopted for the credit risk management process:

Credit risk management in the Group is based on written instructions and procedures defining the methods of identification, measurement, monitoring, limiting and reporting of credit risk. The regulations determine the scope of competences assigned to each unit of the Group in the credit risk management process.

In order to determine the credit risk level, the Group uses the following measures:

The Group carries out regular review of implementation of the adopted credit risk management policy. The following systems and ratios are subject to review and modification:

The Group’s reporting system includes among others:

The Group prepares the following cyclical reports on its credit risk exposure:

Portfolio quality

At the end of 2016 the share of exposures with recognized impairment in the total portfolio amounted to 8.9% and was 1.9 p.p. higher than at the end of 2015, on the one hand as a result of recognizing more impaired loans and on the other hand, due to reduced gross carrying amount of loans and advances. The increase in the value of impaired loan portfolio resulted from Bank’s focus on consumer loans market, which has given rise to a higher risk with assumed high profitability. Additionally, please note the risk profile regarding the cash and installment loan portfolio for years 2013-2016 being higher than initially assumed. Following the risk increase identification, in 2016 the Bank initiated measures aimed at its reduction.


Therefore, at the end of December 2016 the amount of loans with recognized impairment was PLN 96.3 million higher than at the end of 2015. Customer loans are the source of the entire increase, since in the institutional client segment the amount of impaired loans decreased.

Below please find NPL per product group:

NPL for loans and advances (%)

Impairment losses

At the end of December 2016 the carrying amount of impairment losses for the Group’s loan portfolio was PLN 317.8 million and was 38.4% higher compared to the end of 2015, mostly as a result of increased impairment of cash and installment loans resulting from quality deterioration of that portfolio.

Impairment losses on originated loans and advances (PLN million)


At the end of December 2016 the coverage ratio reached 65.4% and was 6.5 p.p. higher than at the end of December 2015. The ratio amounted to 67.6% for consumer loans and to 54.7% for institutional loans.

The calculation includes appropriation to IBNR.

Group's total




Institutional customers