The Bank takes on exposure to credit risk, which is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. Exposure to credit risk arises as a result of the Bank’s lending and other transactions with counterparties giving rise to financial assets.
The objective of credit risk management is to enhance value of business through a system of credit risk management tools, to maximise the Bank’s competitive advantages through performing detailed assessment of the risks accepted by the Bank and through flexible product structuring.
In its lending activities, the Bank applies credit risk limitation requirements of the National Bank of Ukraine. Such limitations are based on the Bank's regulatory capital.
Credit risk is managed by determining a lending policy; diversification of loan portfolio, control over concentrations by businesses, related and corporate borrowers, by industry and by region; and by provisioning, loan analysis and monitoring, as well as the system of credit limits.
Comprehensive credit risk assessment in respect of the Bank’s loan portfolio comprises credit risk measurement and evaluation performed in compliance with the Credit Risk Management Policy. The Bank assesses risk profile of its loan portfolio based on a system of performance measures.