Credit Risk Management

Credit risk refers to the losses incurred when the value of assets (including off balance sheet assets) decline or become worthless due to changes in the fiscal status of those to whom credit is provided.

Specifically, credit risk management entails determining the overall condition of the customer’s business through credit ratings, self-assessment, and other methods. This information is utilized to carry out credit screening for individual loans, administer the loan after it has been extended, and properly determine write offs and reserves. From the perspective of loan portfolio management, the Banks strive to strengthen its control of credit risk and its ability to earn stable income by monitoring its loan balance composition and its credit risk and cost adjusted income.

Risk managers verify that calculated credit risk exposure is within the credit risk limits set under the credit risk management plan, conduct stress tests to assess the Bank’s degree of capital adequacy, and report result regularly to the Board of Directors and other management bodies.