About this Report Chairman's Foreword Corporate Management Report Appendices Governance Consolidated Financial Company Financial Statements Statements Impairment Allowances on Loan Commitments and Financial Guarantees Amounts in millions of euros Impairment allowances on loan commitments and financial guarantees 2018 Subject Subject Subject to to to 12- lifetime lifetime month ECL non- ECL ECL credit credit impaired impaired Total Balance on January 1 Increases due to origination and acquisition Decreases due to derecognition Changes due to change in credit risk Write-off of defaulted loans during the year Other changes Balance on December 31, 2018 33 3 (29) 18 3 28 12 (9) 11 (2) 12 82 17 (43) 34 (1) (20) 69 127 20 (81) 63 (1) (19) 109 In the following table an overview is given of the significant changes in the gross carrying amount of loans and advances to customers during the period that contributed to changes in the total impairment allowance. Changes in the Gross Carrying Amount of Loans and Advances to Customers Amounts in millions of euros Gross carrying amount Non-credit- •impaired Credit- impaired Subject to 12-month ECL Subject to lifetime ECL Subject to lifetime ECL Total Balance on January 1 396,816 14,842 15,773 427,431 Transfers of financial assets (5,957) 4,530 2,856 1,429 New financial assets originated or acquired 117,531 3,962 2,199 123,692 Financial assets that have been derecognised (103,787) (7,328) (4,388) (115,503) Write-offs (15) (2) (493) (510) Other changes (1,985) (58) 46 (1,997) Balance on December 31 2018 402,603 15,946 15,993 434,542 4.3.5 Collateral and Credit Management Rabobank's credit risk exposure is partly mitigated by obtaining collateral where necessary. The amount and nature of the collateral required depends partly on the assessment of the credit risk of the loan to the counterparty. Rabobank has guidelines in place forthe purpose of accepting and valuing different types of collateral. The major types of collateral are: Mortgage collateral on residential property; Mortgage collateral on immovable property, pledges on movable property, inventories and receivables, mainly for business loans; Cash and securities, mainly for securities lending activitiesand reverse repurchase transactions. Management monitors the market value of collateral obtained and requiresadditional collateral where necessary. Rabobankalso uses credit derivatives to manage credit risks and it further mitigates its exposure to credit risk by entering into master netting arrangements with counterparties for a significant volume of transactions. In general, master netting arrangements do not lead to the offsetting of assets and liabilities included in the statement of financial position because transactions are usually settled gross except for transactions that meet the offsetting criteria as mentioned in paragraph 2.11Credit risk is limited by master netting arrangements, but only to the extent that if an event or cancellation occurs, all amounts involving the counterparty are frozen and settled net. The total credit risk exposure from derivatives to which offsetting arrangements apply is sensitive to the closure of new transactions, the expiry of existing transactions and fluctuations in market interest and exchange rates. The table below shows offsets which have been applied in the consolidated balance sheet (IAS 32 Offsetting) and offsets which have not been applied in the statement of financial position (Other offsetting), both limiting credit risk. The other offsets consist of securities Rabobank has received from reverse repurchase transactions and securities Rabobank has provided in relation to loans for repurchase transactions. Annual Report 2018 - Consolidated Financial Statements 156

Rabobank Bronnenarchief

Annual Reports Rabobank | 2018 | | pagina 158