ING Direct 2009 Annual Report Download - page 290

Further, all figures assume that no new credit risks are introduced into the portfolio and that there are no delays in repayments associated
with problem loans, nor are there write offs associated with provisions or impairments. The portfolio runoff is implied by the difference in
the figures between two periods.
LOAN LOSS PROVISIONS
There are three types of provisions that have to be made and accounted for:
Individually Significant Financial Asset (ISFA) Provisions• for those loans where specific, individualized provisions are still required. These
are generally loans that exceed the threshold amount. (1) These provisions are made using an estimated future recovery methodology
and then applying a net present value concept. The future cash flows are based on the restructuring officers’ best estimate of when/if
recoveries will occur. Recoveries can be from any source, such as the sale of collateral, ongoing cash flows, sale of a business/subsidiary,
etc. ISFA provisions are all calculated using a common tool across ING Bank;
Incurred But Not Recognised (IBNR) Provisions• are made for the ‘performing’ loan portfolio as an estimate or proxy for the losses/
defaults that may have already occurred in the portfolio, but which ING has not yet determined or recognised. These provisions are
based on a modified expected loss methodology. The primary modification is that the PD time horizon (12 months) is shortened to
periods of 3, 6, or 9 months, depending on the type of obligor. Generally, the larger the obligor, the shorter the PD time horizon. IBNR
provisions are calculated centrally using a common tool across ING Bank;
Individually Not Significant Financial Asset (INSFA) Provisions• are made for acknowledged problem loans (ratings 20-22) that are below
the threshold amount. Due to their small size, the IFRS rules permit a statistical approach to measuring these provisions. Therefore, the
calculation is based on the same statistical formula that is used to determine IBNR Provisions and is also calculated centrally using a
common tool across ING Bank.
(1) The threshold amount varies per business unit, but generally is nil in the international units, and EUR 1 million in the ‘home markets’.
Cumulative Provisions by geographic area
Country
Central
Governments
and Central
Banks Institutions Corporate
Residential
mortgages Other retail Total 2009 Total 2008
Netherlands 598 104 337 1,039 629
United States of America 211 536 3750 266
Germany 94 263 122 479 354
Belgium 242 35 152 429 332
Spain 249 5 6 260 116
Poland 131 122 154 122
France 147 2149 98
Turkey 1 2 59 273 137 85
Virgin Islands British 107 107 36
Italy 48 329 80 60
Romania 48 126 75 11
India 148 223 74 40
Russia 159 60 45
Ukraine 17 37 54 40
Australia 29 22 51 14
Other 244 396 554 501 363
Total 365 2,503 979 849 4,399 2,611
* Both AIRB and SA portfolios; Excludes securitisations, equities and ONCOA.
* Excludes revaluations made directly through the equity account
Above presentation of the cumulative provisions is based on country of the residence of the obligor. Countries not shown in above table
have cumulative provisions of less than EUR 50 million, and are grouped under Other.
ING Group Annual Report 2009
288
Additional Pillar 3 information for ING Bank only (continued)
2.4 Additional information