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Contents Introduction Management report Appendices Corporate governance Consolidated Financial Statements Company Financial Statements
4.3.4 Credit quality of financial assets
In its financing approval process, Rabobank Group uses the
Rabobank Risk Rating, which reflects the risk of failure or the
probability of default (PD) of the loan relation over a period of
one year. The table below shows the loan quality of the loan-
related balance sheet items after deduction of the impairment
allowance.The loan-quality categories are determined on the
basis of the internal Rabobank Risk Rating. The Rabobank Risk
Rating consists of 21 performance ratings (R0-R20) and four
default ratings (D1-D4).The performance ratings assess the
probability of default within a period of one year and the rating
is determined, in principle, on a cyclically neutral basis. D1-D4
ratings refer to default classifications. D1 represents 90 days'
past due (depending on local conditions this may be extended
to more than 90 days); D2 indicates high probability that the
debtor is unable to pay; D3 indicates that the debtor's assets
will most likely need to be liquidated due to default; and D4
indicates bankruptcy status.The default ratings make up the
total impaired exposure. The'vulnerable'category consists of
performance ratings which are not (yet) classified as impaired.
The other financial assets with a counterparty risk (e.g. cash
and cash equivalents and available-for-sale financial assets) are
of good quality as the exposure is with central banks orthe
portfolio consists of quoted government bonds.
Credit quality of financial assets
in millions of euros
(Virtually) no risk
Adequate to good
Vulnerable
Impaired
Total
On 31 December 2017
Loans and advances to banks
22,742
4,122
70
320
27,254
Loans and advances to customers
Loans to government clients
1,462
770
57
15
2,304
Loans to private clients:
- overdrafts
992
14,482
275
963
16,712
- mortgages
41,773
156,011
2,062
809
200,655
- leases
495
15,083
1,081
158
16,817
- reverse repurchase transactions and securities borrowing agreements
6,312
6,535
12,847
- corporate loans
5,929
153,828
5,311
9,897
174,965
- other
366
7,701
67
44
8,178
Total
80,071
358,532
8,923
12,206
459,732
On 31 December 2016
Loans and advances to banks
18,257
6,798
73
316
25,444
Loans and advances to customers
Loans to government clients
2,370
801
59
4
3,234
Loans to private clients:
- overdrafts
1,229
18,150
514
762
20,655
- mortgages
40,257
162,491
2,319
1,056
206,123
- leases
518
14,727
1,223
204
16,672
- reverse repurchase transactions and securities borrowing agreements
7,605
8,463
16,068
- corporate loans
8,264
160,944
4,709
7,936
181,853
- other
299
7,427
58
7,784
Total
78,799
379,801
8,955
10,278
477,833
Rabobank Annual Report 2017 - Consolidated financial statements
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