Investor Presentaiton
Credit Risk - Collateral values
Valuation of collateral - A Conservative approach for
prudent calculation of provisions
The valuation is a combination of:
New valuations, from independent valuers for (i) New
loans and a 2nd valuation for amounts > €3mn, (ii)
performing accounts with exposures over €3 mn every 3
years (iii) Accounts restructured with LTV > 50%, 1 year
for commercial, 3 years for residential properties
Continuous effort to revalue our mortgaged properties
following the collateral cleansing project. As at
30/09/2015, 35% of valuations are current compared to
30% in December 2014
Key highlights of provisioning methodology
Assumptions and Key drivers:
Type of Collateral
as at 30/09/2015
Retail
Business Corporate RRD
Total
Cash
3%
4%
3%
1%
3%
Bank Guarantees
2%
1%
4%
1%
2%
0%
Mortgages
87%
93%
85%
94%
89%
-10%
Contract of sales
6%
1%
1%
0%
3%
Fixed/Floating
-20%
0%
0%
0%
1%
0%
charge
-30%
Shares/Debentures
0%
0%
3%
1%
1%
-40%
Vehicles
1%
0%
0%
0%
1%
-50%
Other
1%
1%
4%
0%
2%
Total
100%
100%
100%
100%
100%
Older valuations are adjusted/indexed to market values
based on RICS's property price index to reflect current
market conditions
The timing of recovery from mortgages has been
estimated to be 3 years with the exception for specific
cases where a different period has been used based on
specific facts and circumstances.
Back-testing of provisioning methodology:
5.000 properties were used in our sample which were
re-valued in 2015 (actual valuation). Comparison of the
actual valuation versus theoretical index value (based
on RICS). Average difference of 2,1% (slightly higher
drop assumed in RICS)
Adjustment needed for old valuations to
bring them to current market values based on
RICS property price index
1006
3Q06
1Q07
3Q07
1Q08
3Q08
1Q09
3Q09
1Q10
3Q10
1Q11
3Q11
1Q12
3Q12
1Q13
είδε
1Q14
3Q14
1Q15
Bank of Cyprus
57
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