Investor Presentaiton
Appendix 4 Why trade matters: relevance and evolution of trade
1 Risk characteristics of trade finance
Drivers
■ Short-tenor asset class
■ Linked to real economy (working
capital needs of companies)
■ Shorter time to recovery in a
default scenario
Default rate, Expected Loss & Time to recovery of trade finance and other asset classes, 2008-20181
Non Trade Finance
Trade Finance
Obligor-weighted
default rate
Product/asset class
Import L/C
0.36%
Export L/C
0.04%
Loans for import/export
0.73%
Performance guarantees
0.45%
SME
Banks & Fls
Commodities finance
0.25%
0.68%
1.62%
Obligor-weighted
Expected Loss
Loss Given Default
29.9%
0.11%
2.2%
Time to recovery
(days)
111
184
36.3%
0.02%
37.7%
0.28%
123
0.01%
0.44%
27.0%
28.0%
0.07%
24.0%
0.16%
66
393
427
350
Average "Event Likelihood" in the life of a performance guarantee, 2008-20181
100.0%
93.8%
2.1%
Total Transactions
Claims not made
Claims made but
unsuccessful
Source: ICC Trade Register 2019
Trade finance
Other asset classes
Includes claims that are
funded by client's
overdraft account
4.1%
Claim made
and successful
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