Q: Statistics for the following indicators "Past-due and doubtful claims/ Total assets", "Past-due and doubtful loans / Total loan portfolio", "Past-due and doubtful claims / Total liabilities" are published only until the end of 2011. Why? Were they replaced with other indicators?

A: Starting with January 2012, given the shift to the new regulatory framework, namely the implementation of International Financial Reporting Standards (IFRS), the above- mentioned indicators that were a part of the set of indicators usually used to inform the public, could no longer be calculated. Under these circumstances, assets quality assessment was performed using new analysis indicators that during 2012 underwent a process of testing and calibration of the calculation formulas:

1. Impaired loans granted to non-bank clients (net value)/ Total non-banking loan portfolio (net value);
2. Impaired loans granted to non-bank clients (net value)/ Total assets (net value)
3. Impaired loans granted to non-bank clients (net value)/ Total liabilities.

Q: What are the main differences between the two methodologies on the assets quality which led to the calculation of these indicators?

A: The main methodological differences result from the dissimilarities that exist between the regulations based on the European directives and the regulations based on IFRS as follows:

1. the different grouping of assets and liabilities;
2. the restructuring of past-due and doubtful claims accounts into past due but not impaired loans and impaired loans;
3. the mandatory introduction of the effective interest rate method in the implementation of IFRS (previously optional, along with the linear method) for amortising the amounts relative to the effective yield of the financial instrument, impacting the asset value;
4. the introduction of some new accounts representing „amounts to be amortised” for the recognition of the amounts, other than interests, that are taken into account when computing the effective interest rate (e.g. collected commissions);
5. the recognition in the balance sheet, in the context of the shift to IFRS, of the items „Receivables written off from assets, but still followed up” and „ Debtors resulting from claimed penalties” previously recorded off the balance sheet (making the necessary adjustments for impairment losses and keeping them in the balance sheet until they do not generate future benefits any more).

Q: What is the difference between past-due and doubtful claims, on one hand and past due but not impaired loans and impaired loans, on the other hand?

A: The IFRS presentation requirements imposed the restructuring of past-due and doubtful claims into past due but not impaired loans and impaired loans.

Thus, while “past-due claims” included, according to the prior accounting regulations, only overdue instalments, the remainder of the loan being recognised in the current accounts, in compliance with IFRS rules, the full amount of the loan to be repaid shall be disclosed as overdue (principal, interests, amounts to be amortised).

“Doubtful claims” included only disputed claims, while, according to IFRS, the item “impaired loans” was introduced, consisting of assets for which there is an evidence of impairment (loss-generating events, such as an increase in unemployment rate in the geographic area of the debtors, decline in prices of mortgaged property in the relevant fields, observable data that indicate a quantifiable decline in future estimated cash flows) and which include loans that are not yet overdue and claims that are not disputed;

Q: Are these indicators of assets quality assessement comparable with those published prior to the IFRS standards implementation?

A: The data on the two sets of indicators are not comparable since the introduction of IFRS regulations led to some significant changes of a methodological nature on the asset quality assessment indicators

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