Credit Management and Credit Procedures Lars-Erik Kvist Chief - - PowerPoint PPT Presentation

Credit Management and Credit Procedures

Lars-Erik Kvist

Chief Credit Officer

Corporate Bank of the Year 2003

2

Current situation

• Continued stable development of lending volumes
• Continued growth in Spintab and Finans
• Improved efficiency in the handling of credits

3

Group lending

FSPA excl. Hansabank and FI-Holding Hansabank FI-Holding

excluding repurchase agreements and credit institutions

2003 2002 2003 2002 2003 2002 SEK bn 9/30 12/31 9/30 12/31 9/30 12/31 Private individuals 317.1 298.2 10.9 8.7 0.0 0.0

• f which Spintab

267.0 248.2

Real estate management 127.8 124.3 3.4 2.8 16.1 16.8 Retail, hotels, restaurants 15.6 15.6 6.2 5.1 4.5 4.9 Construction 9.2 8.5 1.1 0.8 0.9 1.3 Manufacturing 14.5 14.7 5.7 5.3 30.4 30.7 Transportation 6.5 6.6 3.7 3.3 4.1 4.5 Forestry and agriculture 33.0 30.1 0.9 0.7 0.2 0.3 Other service businesses 16.6 16.1 1.5 1.5 1.2 1.3 Other business lending 49.0 44.5 2.5 2.1 9.5 10.3 Municipalities 14.0 13.7 Total 603.3 572.3 35.9 30.3 66.9 70.1

4

Group lending by collateral

Chattel mortgages, 2,5% (2.6%) Personal guarantee, 1.8% (1.8%) Other properties, 15,6% (16.1%) Unsecured, 11.3% (12.0%) Other collateral, 6.0% (5.5%) Municipalities and county councils, 7.4% (7.3%) Residential properties incl. condominiums, 55.4% (54.7%)

September 30, 2003

Lending SEK 706 bn (673 bn)

(Figures in parantheses refer to December 31, 2002)

5

SEK M Sep 30, 2003 Dec 31, 2003 Change FöreningsSparbanken AB 1,848 1,855 0 % Spintab 426 629 – 32 % FöreningsSparbanken Finans 131 148 – 11 % FI-Holding 539 389 39 % Hansabank 541 439 23 % Others 161 140 14 % Total 3,646 3,600 1 %

Doubtful claims gross by Group unit

6

Loan losses

SEK M Jan-Sep 2003 Jan-Sep 2002 Established 440 531 Provisions 931 1,452 Recoveries – 545 – 740 Change in value of property taken over 6 Total 832 1,243

7

Credit limits

Board of Directors Central level Central Credit Committee Unlimited Board's Credit and Capital Market Committee SEK 150/350 M Local bank SEK 10/20/30/40 M SEK 7.5/15/20/30 M SEK 0.25/3/5 M Unlimited Local board Local delegation Two officers

8

Decision mandates FIH and Hansabank

• Central level -

FIH

Board of Directors > 80 DKK M Loan Committee 80 DKK M Loan Department 10 DKK M

Hansabank

Board of Directors > 15 % of group’s shareholders’ equity Executive Mgmt. < 15 % of group’s shareholders’ equity Group Loan Committee < 10 % of group’s shareholders’ equity Each country’s Loan Committee EUR 7.5 M

9

Credit processing principles

• Local business units have full responsibility for profits,

local business and credits

• Customer account managers forms independently their
• wn opinion of each credit application
• The duality principle applies to processing and decision-

making

• Quality assurance at the central level according to the

principle of significance and risk

10

Credit control principles

• Business units have full responsibility for their

share of the Group’s loan portfolios:

• Credit application processing
• Credit decisions acc. to procedural guidelines
• Management
• Portfolio analysis/Risk profile
• Follow-up
• Chief Credit Officer
• Credit Control Manager

11

Current decision flow

Decision-making unit

• No. of decisions *)

Share Local business units 745,000 **) 99.3 Central Credit Committee 5,000 0.7 Total 750,000 100.0

*) Annual rate of loan decisions incl. estimated number of decisions on change in terms **) Of which approximately 95 % two officers jointly

12

Early warning, etc.

• Focus on insolvency signals
• Online UC reporting (eng > SEK 100,000)
• Engagements under observation
• Risk classification
• Efficient collection process
• Targets for doubtful claims
• Results doubtful claims

13

Central Credit Control

• Quality assurance in Central Credit Committee
• Centralized credit follow-ups and control
• Risk profiles
• Credit quality

14

Central Credit Unit’s control

Credit follow-ups by Central Credit Unit primarily cover:

• Changes in risk levels in the business unit’s credit portfolio
• Business unit’s credit organization,

functionality and duality

• Deviations from credit policy and other rules
• Quality of credit decisions and documentation
• Collections and doubtful engagements
• Continuous engagement follow-ups within

each business unit

• Credit reporting
• Credit area managers

15

“Improvement program” to raise efficiency and business focus

• Move back office from local banks to shared

services

• Loan administration
• Collection administration
• Consumer credits
• Scheduled credit follow-ups