SBN HOLDINGS LIMITED Annual Report 2022
ANNEXURE B RISK AND CAPITAL MANAGEMENT/RISK continued
134
SBN HOLDINGS LIMITED
Annual report 2022
Credit impairment losses on loans and advances
Loans and advances are assessed for possible impairment at each reporting date. Before impairments are allocated to individual loans,
consideration is first given to whether there is evidence of a decrease in expected cash flows from a portfolio of loans and advances.
This will include estimations of the emergence period between the date of the occurrence of the loss event and the identification of that
loss. Portfolio impairments are calculated for both performing and non-performing but not specifically impaired loans. Factors such as
national- and industry-specific economic conditions, the extent of early arrears and any legislation that could affect recovery, are all
considered when calculating the portfolio impairment charge.
For those non-performing loans (NPL) where there is objective evidence of default, specific impairments are calculated using
methodologies that include inputs such as segmentation, modelled expected loss and PD. Estimates of future cash flows on individually
impaired loans are based on historical loss experience for similar loans.
Concentration risk
Concentration risk is the risk of loss arising from an excessive concentration of exposure to a single counterparty, an industry, a product,
a geography, maturity, or collateral. The group's credit risk portfolio is well-diversified. The group's management approach relies on the
reporting of concentration risk along key dimensions, the setting of portfolio limits and stress testing.
IFRS: INDUSTRY SEGMENTAL ANALYSIS GROSS LOANS AND ADVANCES
Collateral
The table on the following pages show the financial effect that collateral has on the group's maximum exposure to credit risk. The table
is presented according to Basel asset categories and includes collateral that may not be eligible for recognition under Basel but that
management takes into consideration in the management of the group's exposures to credit risk. All on- and off-balance sheet exposures
that are exposed to credit risk, including NPL, have been included.
Collateral includes:
■mortgage bonds over residential, commercial and industrial properties
■cession of book debts
■pledge and cession of financial assets
bonds over plant and equipment
■the underlying movable assets financed under leases and instalment sales.
Netting agreements, which do not qualify for offset under IFRS but which are nevertheless enforceable, are included as part of the group's
collateral. All exposures are presented before the effect of any impairment provisions.
Of the group's total exposure, 3% (2021: 13%) is unsecured and mainly reflects short-term exposures to individuals.
Collateral coverage -
Total collateral
Gross
exposure
N$'000
Impairments
N$'000
Unsecured
N$'000
Secured
N$'000
1 to 50 %
N$'000
50 to 100%
N$'000
Agriculture
Construction
Electricity
Finance, real estate and other business services
Individuals
Manufacturing
Mining
Other services
Transport
Wholesale
Gross loans and advances
All loans are recorded in Namibia.
IFRS: SEGMENTAL ANALYSIS OF STAGE 3 ECL OF LOANS AND ADVANCES
Agriculture
Construction
Electricity
Finance, real estate and other business services
Individuals
Manufacturing
Other services
Transport
Wholesale
Total ECL for stage 3 loans and advances excluding IIS
All impairments relate to loans that are recorded in Namibia.
2022
N$'000
2021
N$'000
522 934
636 458
136 921
35 014
6 961 548
15 201 703
14 658 770
2 146 266
523 718
615 172
713 714
144 802
443 155
321 459
123 724
272 429
7 623 080
1 474 257
445 522
108 348
2022
Corporate
Sovereign
Bank
Retail
Retail mortgage
Other retail
Total
5 137 652
41 177
267 375
1 828
2 169 311
23 949 856
11 774 737
12 175 119
2 055
716 723
432 526
284 197
2 167 256
5 096 475
265 547
5 096 475
265 547
2 167 256
140 235
23 092 898
23 092 898
11 342 211
11 342 211
140 235
11 750 687
11 750 687
31 524 194
761 783
140 235
30 622 176
30 622 176
26 731 233
26 377 761
Add: Financial assets not exposed to
credit risk
7 449 188
(761 783)
(216 012)
2022
N$'000
2021
N$'000
(30 000)
(4 271)
(81129)
(8977)
(289)
(329)
(55 856)
(259 620)
(3 810)
(10 718)
(2 386)
(367 044)
(692 007)
1
(94)
(350 577)
(1760)
(29 716)
(1 651)
(1856)
Less: Impairments for loans and
advances
Less: Unrecognised off-balance sheet
items
Total exposure
Reconciliation to statement of
financial position:
Cash and balances with central banks
Derivative assets
Trading assets
Financial investments
Loans and advances
Other financial assets¹
Total
(4 792 961)
33 418 638
1 673 337
138 918
474 621
4 923 014
25 969 450
239 298
33 418 638
Other financial assets are included in other assets in the statements of financial position.
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