ING Direct 2008 Annual Report Download - page 195

Credit quality: ING Bank portfolio, outstandings
2008 2007
Neither past due nor impaired 817,069 750,049
Past due but not impaired (1-90 days) (1) 7, 224 5,416
Impaired 8,592 5,219
832,885 760,684
(1) Based on lending (consumer loans and residential mortgages only).
Aging analysis (past due but not impaired): ING Bank portfolio, outstandings (1,2)
2008 2007
Past due for 1-30 days 5,844 4,709
Past due for 31-60 days 1,223 633
Past due for 61-90 days 157 74
7,224 5,416
(1)
Based on lending (consumer loans and residential mortgages only).
(2) The amount of past due but not impaired financial assets in respect of non-lending activities was not material.
There is no significant concentration of a particular type of loan structure in the past due or the impaired loan portfolio.
ING tracks past due but not impaired loans most closely for the consumer loan and residential mortgage portfolios. Generally, all loans
with past due financial obligations of more than 90 days are automatically reclassified as impaired. For the wholesale lending portfolios
and securities obligations, there are generally reasons for declaring a loan impaired prior to being 90 days past due. These include, but
are not limited to, ING’s assessment of the customer’s perceived inability to meet its financial obligations, or the customer filing for
bankruptcy or bankruptcy protection. In some cases, a material breach of financial covenants will also trigger a reclassification of a
loan to the impaired category.
Repossession policy
It is ING’s general policy not to take possession of assets of defaulted debtors. Rather, ING attempts to sell the assets from within the
legal entity that has pledged these assets to ING, in accordance with the respective collateral or pledge agreements signed with the
obligors. In those cases where ING does take possession of the collateral, ING generally attempts to sell the assets as quickly as possible
to prospective buyers. Based on internal assessments to determine the highest and quickest return for ING, the sale of repossessed
assets could be the sale of the obligor’s business as a whole (or at least all of its assets), or the assets could be sold piecemeal.
Impaired Loans: ING Bank portfolio, outstandings by economic sector
2008 2007
Private individuals 3,718 2,356
Construction, Infrastructure and Real Estate 1,770 635
General Industries 1,036 270
Food, Beverages and Personal Care 397 264
Financial Institutions 372 538
Automotive 322 200
Services 270 219
Retail 176 131
Other 531 606
Total 8,592 5,219
The table above represents the economic sector breakdown of credit risk outstandings (including impaired amounts) for loans and
positions that have been classified as problem loans and for which provisions have been made. Against this portfolio, ING holds specific
and collective provisions of EUR 1,067 million and EUR 799 million, respectively (2007 EUR 711 million and EUR 680 million respectively),
representing the difference between the amortised cost of the portfolio and the estimated recoverable amount discounted at the
effective rate of interest.
Provisions
The credit portfolio is under constant review. A formal analysis takes place quarterly to determine the provisions for possible bad debts, using
a bottom-up approach. Conclusions are discussed by the ING Provisioning Committee (IPC), which advises the Executive Board on specific
provisioning levels. ING Bank identifies as impaired loans those loans for which it is probable, based on current information and events that
the principal and interest amounts contractually due will not be collected in accordance with the contractual terms of the loan agreements.
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ING Group Annual Report 2008