65. Forbearance practices

logo
PKO Annual
Report Online
2020

Forbearance is defined by the group as actions aimed at amending contractual terms agreed with a debtor or an issuer forced by the debtor’s or issuer’s difficult financial situation (restructuring activities introducing concessions that otherwise would not have been granted). The aim of forbearance activities is to restore a debtor’s or an issuer’s ability to settle their liabilities towards the Group and to maximize the efficiency of non-performing loans management, i.e. obtaining the highest possible recoveries while minimizing the costs incurred.

Forbearance changes in repayment terms may consist in:

  • dividing the debt due into instalments;
  • changing the repayment scheme (annuity payments, degressive payments);
  • extending the loan period;
  • changing the interest rate;
  • changing the margin;
  • reducing the debt.

As a result of signing a forbearance agreement and repaying the amounts due under it on a timely basis, a non-performing loan becomes a performing loan.

The provision of facilities within the framework of forbearance, as a premise of impairment, results in the recognition of the premise of impairment and the classification of the credit exposure into the portfolio of exposures at risk of impairment.

The inclusion of such exposures in the portfolio of performing exposures (discontinuing recognition of the forbearance agreement as an impairment trigger) takes place at least 12 months after the introduction of forbearance, provided that all payments in arrears and at least six scheduled payments have been made by the customer and, in the Group’s opinion, the current situation of the customer does not pose a threat to their compliance with the terms of the restructuring agreement.

Exposures cease to meet the criteria of a forborne exposure when all of the following conditions are met:

  • at least 24 months have passed from the date of including the exposure into the portfolio of performing exposures (conditional period);
  • as at the end of the conditional period referred to above, the customer has no debt towards the Group overdue for more than 30 days;
  • at least 12 instalments have been repaid on a timely basis and in the amounts agreed.

Forborne exposures are monitored on an on-going basis. Throughout the whole period of their recognition allowances are recognized for these exposures in the amount of expected losses over the life horizon of the exposure.

31.12.2020 Instruments with modified terms and conditions Refinancing Total, gross Impairment allowances Total, net
Performing exposures
Not held for trading, measured at fair value
through profit or loss:
17 17 17
consumer loans 17 17 17
Measured at amortized cost: 951 951 (65) 886
housing loans 375 375 (29) 346
corporate loans 509 509 (28) 481
consumer loans 62 62 (8) 54
należności z tytułu leasingu finansowego 5 5 5
Total performing exposures 968 968 (65) 903
Non-performing exposures
Not held for trading, measured at fair
value through profit or loss:
207 207 207
consumer loans 47 47 47
corporate bonds 160 160 160
Measured at fair value through OCI: 457 457 (14) 443
corporate bonds 457 457 (14) 443
Measured at amortized cost: 2 216 34 2 250 (1 012) 1 238
housing loans 437 437 (239) 198
corporate loans 1 575 32 1 607 (726) 881
consumer loans 129 2 131 (33) 98
finance lease receivables 75 75 (14) 61
Total non-performing exposures 2 880 34 2 914 (1 026) 1 888
TOTAL EXPOSURES SUBJECT TO FOBEARANCE 3 848 34 3 882 (1 091) 2 791

31.12.2019 Instruments with modified terms and conditions Refinancing Total, gross Impairment allowances Total, net
Performing exposures
Not held for trading, measured at fair value
through profit or loss:
19 19 19
consumer loans 19 19 19
Measured at amortized cost: 1 129 1 1 130 (70) 1 060
housing loans 466 466 (27) 439
corporate loans 600 1 601 (39) 562
consumer loans 55 55 (4) 51
należności z tytułu leasingu finansowego 8 8 8
Total performing exposures 1 148 1 1 149 (70) 1 079
Non-performing exposures
Not held for trading, measured at fair
value through profit or loss:
216 216 216
consumer loans 37 37 37
corporate bonds 179 179 179
Measured at fair value through OCI: 463 463 (5) 458
corporate bonds 463 463 (5) 458
Measured at amortized cost: 2 068 45 2 113 (822) 1 291
housing loans 485 485 (226) 259
corporate loans 1 399 42 1 441 (548) 893
consumer loans 114 3 117 (36) 81
finance lease receivables 70 70 (12) 58
Total non-performing exposures 2 747 45 2 792 (827) 1 965
TOTAL EXPOSURES SUBJECT TO FOBEARANCE 3 895 46 3 941 (897) 3 044

LOANS AND ADVANCES TO CUSTOMERS SUBJECT TO FORBEARANCE 2020 2019
Recognized interest income on forborne loans granted to customers 89 139

Search results: