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Risk Management

The Bank is exposed to various types of risk arising from external and internal factors induced by the characteristics of the markets where it operates. These include credit risk, market risk, liquidity risk and operational risk.

The objective of the Risk Management function - a key function to the development of the Bank's activities - is to identify, assess, monitor and report all the material risks to which the Bank is subject to, both internally and externally, so that such risks remain within limits that are consistent with the risk profile and risk tolerance level approved by the management body of each institution and therefore do not affect that institution's financial solvency.

The Risk Management function operates independently from the business areas, providing advice on risk management to the decision-takers of the Bank. The Bank has in place systems to identify, monitor and manage risks, as well as areas to support the business development.



As of 31 December 2014, the Bank's Core Tier I ended up at 9.44%, well above the regulatory levels. At the end of 2014 Risk Weighted Assets had decreased by 12.7%, to EUR 4,157 million.

<p>Source: Haitong Bank</p>

Source: Haitong Bank


Credit provisions were reinforced by EUR 169,605 thousand, which represents a 347% year-on-year increase in the provision charge (EUR 37,875 thousand in 2013). The impairment cost (netcharges/customer loans ) climbed to 9.94%, from 1.89% in 2013. As a result,the credit provisions/gross customer loans ratio increased from 6.27% in December 2013 to 15.48% in December 2014.



Consolidated Value at Risk (VaR) in the trading book and including trading positions in commodities and FX positions totalled EUR 9,844 thousand in December 2014, which is EUR 5,798 thousand less than in December 2013.

The Bank's banking book exposure to interest rate risk, assuming a parallel yield curve shift of 200 bps, shows a negative impact of EUR 7,333 thousand, which compares with a EUR 38,953 thousand negative impact in December 2013.



The Bank's liquidity gap up to one year improved from EUR -1,200,705 thousand on 31 December 2013 to EUR -840,143 thousand at the end of the reporting year.This positive change is a result of the balance sheet deleveraging. The Bank maintained its recurrent dependence on short-term funding provided by Novo Banco due to liquidity management being integrated at Novo Banco Group level.

<p>Source: Haitong Bank</p>

Source: Haitong Bank