| LOANS AND ALLOWANCE FOR LOAN LOSSES | NOTE 13: LOANS AND ALLOWANCE FOR LOAN LOSSES Loans: Concentration of credit risk Loans granted by the Group according to type of loan, which represents the Group's concentration of credit risk, at December 31, 2015 and 2016 comprised: 2015 2016 Greek Foreign Total Greek Foreign Total residents residents (EUR in millions) Consumer: Residential mortgages 16,664 1,070 17,734 15,951 1,054 17,005 Credit card 1,244 83 1,327 953 86 1,039 Auto financing 64 4 68 50 2 52 Other consumer 4,095 896 4,991 3,668 906 4,574 Total consumer 22,067 2,053 24,120 20,622 2,048 22,670 Commercial: Industry and mining 5,564 441 6,005 4,941 419 5,360 Small scale industry 1,765 150 1,915 1,619 225 1,844 Trade 7,559 631 8,190 7,367 658 8,025 Construction 1,061 644 1,705 1,028 530 1,558 Tourism 451 68 519 813 68 881 Shipping and transportation 2,557 179 2,736 2,488 176 2,664 Commercial mortgages 759 176 935 747 172 919 Public sector 5,218 93 5,311 5,024 84 5,108 Other 574 296 870 636 210 846 Total commercial 25,508 2,678 28,186 24,663 2,542 27,205 Total loans 47,575 4,731 52,306 45,285 4,590 49,875 Unearned income (80) (7) (87) (68) (7) (75) Loans, net of unearned income 47,495 4,724 52,219 45,217 4,583 49,800 Less: Allowance for loan losses (10,799) (499) (11,298) (9,913) (488) (10,401) Net Loans 36,696 4,225 40,921 35,304 4,095 39,399 Included in the above table are loans for lease financing amounting to EUR 742 million and EUR 766 million in 2015 and 2016 respectively. Loans: Credit quality indicators The Group actively monitors the credit quality of its loan portfolio using several credit quality indicators. The credit quality indicators considered to be the most significant are the delinquency status for all loans, and the credit rating for commercial loans. The days past due is the credit quality indicator the most relevant to the loans in our consumer loans portfolio. In accordance with our policies, the number of days past due is the key factor the Group considers when determining the appropriate course of action. For instance, the actions to pursue collection increase as the number of days past due increases. Furthermore, days past due is also a key factor considered in determining the loans that are eligible for our restructuring programs . Ageing of loan portfolio The following tables provide details of delinquent and non-accruing loans by loan class at December 31, 2015 and 2016: December 31, 2015 Of which: Past due 31-90 days Past due greater than 90 days Total Past due loans Current loans (1) Loans measured at Fair value Total +90 days
and accruing loans Non
accruing
loans EUR in millions Greek Residential mortgages 618 5,444 6,062 10,602 - 16,664 159 8,246 Credit card 20 705 725 519 - 1,244 50 655 Other consumer 121 2,425 2,546 1,613 - 4,159 - 3,172 Small business loans 46 2,368 2,414 1,443 - 3,857 - 2,623 Other commercial loans 910 4,117 5,027 16,624 - 21,651 34 4,951 Total Greek loans 1,715 15,059 16,774 30,801 - 47,575 243 19,647 Foreign Residential mortgages 54 89 143 927 - 1,070 - 111 Credit card 1 8 9 74 - 83 - 8 Other consumer 27 119 146 754 - 900 1 124 Small business loans 14 39 53 164 - 217 - 52 Other commercial loans 58 674 732 1,729 - 2,461 1 807 Total Foreign loans 154 929 1,083 3,648 - 4,731 2 1,102 Total loans 1,869 15,988 17,857 34,449 - 52,306 245 20,749 December 31, 2016 Of which: Past due 31-90 days Past due greater than 90 days Total Past due loans Current loans (1) Loans measured at Fair value Total +90 days
and accruing loans Non
accruing
loans EUR in millions Greek Residential mortgages 485 5,120 5,605 10,346 - 15,951 92 8,358 Credit card 11 449 460 493 - 953 53 396 Other consumer 88 1,988 2,076 1,642 - 3,718 - 2,757 Small business loans 46 2,288 2,334 1,317 - 3,651 - 2,582 Other commercial loans 567 3,929 4,496 16,516 - 21,012 5 5,195 Total Greek loans 1,197 13,774 14,971 30,314 - 45,285 150 19,288 Foreign Residential mortgages 50 89 139 915 - 1,054 - 106 Credit card 1 8 9 77 - 86 - 8 Other consumer 25 89 114 794 - 908 1 93 Small business loans 17 33 50 187 - 237 - 42 Other commercial loans 58 727 785 1,520 - 2,305 7 795 Total Foreign loans 151 946 1,097 3,493 - 4,590 8 1,044 Total loans 1,348 14,720 16,068 33,807 - 49,875 158 20,332 (1) loans less than 30 days past due are included in current loans Credit ratings of commercial loans According to the Group’s credit policy, all corporate customers are rated on a 21 grade scale. This rating is based on quantitative and qualitative criteria and is reviewed at least annually. Additionally, each of the Bank’s and its subsidiaries’ rating systems consider the borrower’s industry risk and its relative position within its peer group. Small Business loans are rated through a behavioral model on a 14 grade scale. The ratings scale for corporate and Small Business customers corresponds to likelihood of default. Customers classified as “Satisfactory” have low likelihood of default, customers classified as “Watchlist” have medium to high likelihood of default and customers classified as Substandard have already defaulted. The following table presents commercial loans credit quality information as at December 31, 2015 and 2016: December 31, 2015 December 31, 2016 Small business loans Other commercial loans Total commercial loans Small business loans Other commercial loans Total commercial loans (EUR in millions) (EUR in millions) Greek Satisfactory 659 12,884 13,543 624 12,251 12,875 Watchlist 837 4,269 5,106 722 2,520 3,242 Substandard 2,361 4,498 6,859 2,305 6,241 8,546 3,857 21,651 25,508 3,651 21,012 24,663 Foreign Satisfactory 153 1,361 1,514 181 1,222 1,403 Watchlist 23 575 598 21 284 305 Substandard 41 525 566 35 799 834 217 2,461 2,678 237 2,305 2,542 Total 4,074 24,112 28,186 3,888 23,317 27,205 Impaired loans Impaired loans are those loans where the Group believes it is probable that it will not collect all amounts due according to the original contractual terms of the loan. Impaired loans also include loans whose terms have been modified in troubled debt restructuring. The following table presents information about total impaired loans at and for the years ended December 31, 2015 and 2016: At and for the year ended December 31, 2015 Total recorded balance Related
allowance Average
recorded
balance Interest income recognized during the period the loan was impaired Interest income recognized on a cash basis (EUR in millions) Greek With no related allowance: Residential mortgages 1,553 - 1,078 24 24 Other consumer loans 368 - 298 13 13 Small business loans 171 - 192 2 2 Other commercial loans 422 - 412 6 6 With related allowance: Residential mortgages 7,384 (1,869) 7,046 95 84 Credit cards 705 (673) 717 - - Other consumer loans 2,774 (2,243) 2,719 68 59 Small business loans 2,532 (1,675) 2,439 15 10 Other commercial loans 6,447 (4,111) 5,366 111 68 Total Greek impaired loans 22,356 (10,571) 20,267 334 266 Foreign With no related allowance: Residential mortgages 2 - 3 - - Credit cards 3 - 3 - - Other consumer loans 25 - 25 - - Other commercial loans 65 - 79 - - With related allowance: Residential mortgages 197 (25) 182 7 - Credit cards 5 (6) 5 - - Other consumer loans 120 (91) 68 - 1 Small business loans 58 (25) 55 1 - Other commercial loans 925 (352) 793 - 1 Total Foreign impaired loans 1,400 (499) 1,213 8 2 At and for the year ended December 31, 2016 Total recorded balance Related
allowance Average
recorded
balance Interest income recognized during the period the loan was impaired Interest income recognized on a cash basis (EUR in millions) Greek With no related allowance: Residential mortgages 2,708 - 2,130 38 37 Other consumer loans 613 - 492 21 20 Small business loans 119 - 145 2 2 Other commercial loans 696 - 559 14 14 With related allowance: Residential mortgages 6,064 (2,112) 6,724 62 59 Credit cards 449 (434) 577 - - Other consumer loans 2,208 (1,837) 2,488 53 47 Small business loans 2,495 (1,721) 2,482 21 15 Other commercial loans 6,064 (3,618) 5,932 111 85 Total Greek impaired loans 21,416 (9,722) 21,529 322 279 Foreign With no related allowance: Residential mortgages 3 - - - - Other consumer loans 1 - - - - Other commercial loans 74 - 81 - - With related allowance: Residential mortgages 202 (25) 64 - - Credit cards 8 (6) 7 - - Other consumer loans 116 (62) 73 - 2 Small business loans 55 (25) 56 - - Other commercial loans 797 (355) 629 - - Total Foreign impaired loans 1,256 (473) 910 - 2 2014 2015 2016 (EUR in millions) Average recorded investment in impaired loans 19,290 21,480 22,439 Interest income recognized on a cash basis 113 268 281 Roll forward of impaired loans The following table presents the roll-forward of impaired loans for the years ended, December 31, 2015 and 2016: 2015 2016 (EUR in millions) Opening balance as of January 1, 20,127 23,756 Impaired loans in the period 5,517 1,528 Loans transferred to non-impaired status (1,132) (446) Impaired loans paid-off (563) (745) Sale of impaired loans (1) (6) Impaired loans written-off (178) (1,415) Foreign exchange differences (14) - Closing balance as of December 31, 23,756 22,672 Purchased Credit-Impaired Loans ( "PCI loans") PCI loans are acquired loans with evidence of credit quality deterioration since origination for which it is probable at purchase date that NBG will be unable to collect all contractually required payments. The following table provides details on PCI loans acquired in connection with the May 10, 2013 and July 26, 2013 acquisition of FBB and Probank respectively. Purchased Loans at Acquisition Date (EUR in millions) Contractually required payments including interest 1,508 Less: Non-accretable difference 670 Cash flows expected to be collected 838 Less: Accretable yield 178 Fair Value of loans acquired 660 The table below shows activity for the accretable yield on PCI loans, which includes the FBB and Probank portfolio. Rollforward of Accretable Yield (EUR in millions) Accretable yield January 1, 2014 165 Accretion (26) Accretable yield December 31, 2014 139 Rollforward of Accretable Yield (EUR in millions) Accretable yield January 1, 2015 139 Accretion (25) Accretable yield December 31, 2015 114 Rollforward of Accretable Yield (EUR in millions) Accretable yield January 1, 2016 114 Accretion (25) Accretable yield December 31, 2016 89 Troubled Debt Re s truct u r ings Modifications are considered TDRs if, for economic or legal reasons related to the debtor's financial difficulties, a concession is granted to the customer that the Group would not otherwise consider. The concession granted typically involves a modification of terms such as the modification of the stated interest lower than the current market rate for a new loan with similar risk , or forgiveness of principal of the loan, or forgiveness of interest accrued off balance sheet or the extension of maturity . TDR balances presented in the disclosures “financing receivables modified as troubled debt restructuring during the period” and “troubled debt restructurings by modification programs” for 2016 have decreased in comparison to 2015 , as a consequence of the stabilization of the quality of our portfolio in 2016 and the focus to propose more efficient long term restructuring products to its customers. Forbearance programs applied in the Consumer segment (mortgage s, consumer loans, credit cards ) mainly comprise of extension of the loan term combined with a reduction of the installment either through fractional payment scheme of up to 36 months, which, upon expiry, may be extended for another 36 months, whereby the customer pays a proportion, ranging from 10%(in very rare occasions) to 70% of the installment due, or through an interest only payment period of a maximum of 24 months, which, upon expiry, may be extended for another 24 months under certain conditions. Specifically, for consumer loans the interest rate on the new loan may be reduced and/or the duration may be extended if the customers are willing and able to secure their consumer loan and credit card debt with real estate property or provide a down payment. In addition, Split & Freeze is a new split-balance type of restructuring product offered both for mortgage loans and secured consumer loans. An amount of 20%-60% (according to the borrower' s affordability) of the balance to be restructured remains frozen for 10 years. For SBL customers, the restructuring product generally includes the granting of a grace period of up to 24 months during which the customer pays only interest, the extension of the maturity of the loan up to 20 years and the option to the customer to make a down payment, which if the loan is repaid in accordance with the re structured terms will be returned as a discount or the application of lower interest rate in case the customer provides new collaterals. In addition, restructuring over restructuring (“R O R”) programs are addressed to those customers having difficulty in servicing their restructured loans. Furthermore , forbearance programs applied in SBL loans also comprise of extension of loan maturity combined with reduction of installment through fractional payment scheme of up to 36 months, which, upon expiry, may be extended for another 36 months, whereby the customer pays a proportion, ranging from 30% to 70% of the installment due. An additional product offered for SB L loans is the Fast Capital Repayment. It offers a 5-year grace period, whereby the capital is paid on a monthly or quarterly basis with possibility of fractional payment ranging from 30% to 70% according to the borrower's affordability. The interest is calculated semiannually and is forgiven up to 100% if the customer remains current in his capital installment payments. Those programs also offer a reduction on the off-balance sheet interest. Troubled debt restructuring programs are also offered to corporate customers who have been affected by the current market conditions. The types of modification are usually a mix of new amortization schedule tailored to current conditions and the customer's projected cash flow, the extension or not of tenor, depending on the customer and its needs, as well as shift from short - term to long - term financing. TDRs are considered impaired loans. TDRs are separately monitored and assessed within each portfolio for the purposes of allowance for loan loss calculation. Allowance for loan loss is calculated based on a present value of expected future cash flows discounted using the original effective interest rate of the loan considering all available evidence at the time of the assessment. At the time of the restructuring, the loans are remeasured to reflect the impact, if any, on projected cash flows or collateral value resulting from the modified terms. If there was no principal forgiveness or the interest rate was increased, the modification may have a little impact or no impact on the allowance for loan loss. If a portion of the loans is deemed uncollectible, an allowance for loan loss is recorded at the time of restructuring or may have been already recorded in a previous period. Typically, allowance for loan loss for TDR Consumer loans is calculated using the average of yearly default frequencies of those specific products. Upon restructuring if several customer's loans are consolidated into a single loan, then the aggregate loan balance, which may also include loans previously accruing, is assessed for impairment. In addition, restructured loans under Greek Law 3869/2010 are considered TDRs and are pooled into a separate group when calculating allowance for loan losses. Allowance for loan loss for TDR Commercial loans is usually calculated on an individual basis for customers with significant exposures based on the present value of expected cash flows discounted at the loan's original effective interest rate, or based on the fair value of the collateral, less costs to sell, if those are collateral dependent loans. For TDR Commercial customers that do not satisfy the quantified criterion for individual assessment (that is, the individually non significant customers), allowance for loan loss is calculated through our coefficient or homogeneous analysis using the probability of default corresponding to their internal credit rating. The trends of re default are closely monitored and analyzed in order to identify the drivers for the re defaults. In addition, trends of re default are considered when calculating the appropriate level of the allowance for loan loss by adjusting the probabilities of default relating to both Consumer and Commercial TDR loans. The following table discloses financing receivables modified as troubled debt restructurings during the reporting period ended December 31, 2014 , 2015 and 2016. December 31, 2014 December 31, 2015 December 31, 2016 Greek Total balance Allowance for loan losses Interest income recognized during the period Total balance Allowance for loan losses Interest income recognized during the period Total balance Allowance for loan losses Interest income recognized during the period EUR in millions EUR in millions EUR in millions Residential mortgages 1,451 (66) 11 1,633 (127) 20 1,185 (115) 17 Other consumer 300 (49) 7 342 (62) 17 320 (72) 14 Small business loans 352 (89) 11 263 (60) 1 243 (66) 8 Other commercial loans 349 (77) 8 1,413 (685) 22 1,405 (611) 47 Total Greek TDR loans 2,452 (281) 37 3,651 (934) 60 3,153 (864) 86 December 31, 2014 December 31, 2015 December 31, 2016 Foreign Total balance Allowance for loan losses Interest income recognized during the period Total balance Allowance for loan losses Interest income recognized during the period Total balance Allowance for loan losses Interest income recognized during the period EUR in millions EUR in millions EUR in millions Residential mortgages 25 - - 29 (1) - 29 (3) - Other consumer 6 - - 7 (1) - 6 (2) - Small business loans 12 (2) - 18 (3) - 10 (2) - Other commercial loans 145 (3) 2 169 (13) 6 171 (32) 14 Total foreign TDR loans 188 (5) 2 223 (18) 6 216 (39) 14 The following table discloses financing receivables modified in a TDR which became delinquent thirty days or greater during the reporting period and for which payment default occurred within 12 months after the modification. December 31, 2014 December 31, 2015 December 31, 2016 Greek Foreign Greek Foreign Greek Foreign EUR in millions EUR in millions EUR in millions Residential mortgages 896 1 836 1 607 1 Other consumer 263 - 139 - 165 - Small business loans 56 5 230 12 172 5 Other commercial loans 67 41 983 13 1,091 13 Total loans 1,282 47 2,188 26 2,035 19 The Group offers a number of modifications to customers. The modification programs that the Group offers its customers can generally be described in the following categories: Payment modification – A modification in which the principal and interest payment are lowered from the original contractual terms. Term modification - A modification which changes the maturity date, timing of payments or frequency of payments. Interest only modification – A modification in which the loan is converted to interest only payments for a period of time. Combination modification – Any other type of modification, including the use of multiple categories above. The following table discloses financing receivables modified as troubled debt restructurings by modification programs as at December 31, 2014, 2015 and 2016. December 31, 2014 2015 2016 Payment modification 3,981 6,470 6,027 Combination modification 2,399 1,056 967 Term modification 1,348 2,111 3,459 Interest only modification 565 1,178 1,044 Other 163 660 692 Total 8,456 11,475 12,189 The following table discloses the ageing of financing receivables modified as troubled debt restructurings at December 31, 2014, 2015 and 2016. December 31, 2014 2015 2016 Current Loans (1) 4,262 5,828 6,536 Past due 31-90 days 519 920 731 Past due greater than 90 days 3,675 4,727 4,922 Total 8,456 11,475 12,189 (1) Loans less than 30 days past due are included in current loans. Allowance for loan losses An analysis of the change in the allowance for loan losses by portfolio segment for the years ended December 31, follows: 2014 2015 2016 Consumer Commercial Total Consumer Commercial Total Consumer Commercial Total (EUR in millions) Balance at beginning of year 3,445 3,207 6,652 4,027 4,220 8,247 5,011 6,287 11,298 Provision for loan losses 623 1,144 1,767 1,031 2,187 3,218 106 445 551 Write-offs (45) (88) (133) (53) (126) (179) (758) (689) (1,447) Recoveries 5 4 9 5 3 8 4 1 5 Net Write-offs (40) (84) (124) (48) (123) (171) (754) (688) (1,442) Sale of impaired loans - (25) (25) - - - - (1) (1) Translation differences (1) (22) (23) 1 3 4 (11) 6 (5) Allowance at end of year 4,027 4,220 8,247 5,011 6,287 11,298 4,352 6,049 10,401 The Group’s exposure to the Hellenic Republic comprises of a loan granted to the Hellenic Republic, loans to Hellenic Republic public sector entities, loans guaranteed by the Hellenic Republic and loans to corporate and individuals guaranteed by the Hellenic Republic. Exposure to the Hellenic Republic and its related allowance at December 31,2015, and 2016 are as follows: December 31, 2015 December 31, 2016 Total loans Allowance for loan losses Total loans Allowance for loan losses (EUR in millions) (EUR in millions) Loan to Hellenic Republic 4,651 - 4,512 - Loans to public sector entities 597 (108) 503 (86) Corporate and Small Business loans 557 - 455 - Mortgage loans 1,072 - 937 - Total loans 6,877 (108) 6,407 (86) Other assets 581 (60) 625 - Total Exposure to Hellenic Republic 7,458 (168) 7,032 (86) With regards to the above exposure the Group has consistently applied its provisioning policy and has recognized allowance for loan losses, where deemed appropriate. As at December 31, 201 6 , the Group considered (a) the fact that no specific loss event in relation to the Hellenic Republic had occurred , ( b ) the fact that Hellenic Republic serviced the aforementioned exposures , and concluded that the exposure to Hellenic Republic did not qualify for impairment assessment . Allowance for loan losses by portfolio segment The following table provides the allowance for loan losses by portfolio segment and the respective recorded investment at December 31, 2015. Consumer loans Commercial loans Total Greek (EUR in millions) Allowance for loan losses at year end 4,887 5,912 10,799 of which: for impaired loans 4,786 5,785 10,571 for non-impaired loans 101 127 228 Impaired loans 12,784 9,572 22,356 Non-impaired loans 9,283 15,935 25,218 Foreign Allowance for loan losses at year end 124 375 499 of which: for impaired loans 122 375 497 for non-impaired loans 2 - 2 Impaired loans 353 1,047 1,400 Non-impaired loans 1,700 1,631 3,331 The following table provides the allowance for loan losses by portfolio segment and the respective recorded investment at December 31, 2016. Consumer loans Commercial loans Total Greek (EUR in millions) Allowance for loan losses at year end 4,251 5,662 9,913 of which: for impaired loans 4,210 5,512 9,722 for non-impaired loans 41 150 191 Impaired loans 12,042 9,374 21,416 Non-impaired loans 8,580 15,289 23,869 Foreign Allowance for loan losses at year end 101 387 488 of which: for impaired loans 93 380 473 for non-impaired loans 8 7 15 Impaired loans 330 926 1,256 Non-impaired loans 1,718 1,616 3,334 Allowance for loan losses by portfolio segment and methodology A s discussed in Note 3 our methodology for estimating the allowance for loan losses has three primary components: specific allowances, coefficient analysis and homogeneous analysis , while the methodologies applied by our foreign subsidiaries and branches are similar to those employed by the Group for loans in Greece. Loss forecast models utilized for portfolios of homogeneous loans consider a variety of factors including, but not limited to, historical loss experience, anticipated defaults or foreclosures based on portfolio trends, delinquencies and credit scores, and expected loss factors by loan type. In addition, in calculating our homogeneous allowances for loan losses we consider the current economic conditions and trends and changes in lending policies and procedures. The current macroeconomic conditions affect our default and recovery models gradually as more information regarding the performance and behavior of loan customers is gathered. Based on this information we adjust the “Loss - given - default” and “Probability of Default” parameters used for the estimation of allowance for loan losses , keeping the fundamental methodology intact, that is, we continue to calculate recoveries (and losses) based on realized cash inflows (“workout approach”) . A s a t December 31, 2016 , we did not believe an adjustment to historical loss experience for changes in trends, conditions, and other relevant factors that affect repayment of the loans was necessary beyond the incorporation of current information in the data used to estimate the homogeneous allowances. In calculating our homogeneous allowances for loan losses we considered the following key factors: Volume of past - due and non - accru ing loans: The volume of past due and non - accruing loans in 2016 automatically fed into the calculation of the allowance for loan losses by: (a) less in creasing the underlying pools before write-offs on which we calculate a significant porti on of the total loss allowances; (b) adjusting the loss rates by incorporating the most recent available information on recoveries and (c) adjusting the probability of default , which is estimated using data from the previous twe lve months. The stabilizing quality of our loan portfolio in terms of lower formation of non - accruing and past due loans was the pri mary cause of the significant de crease in the provision for loan losses based on homogeneous analysis. As at December 31, 2016 , we concluded that the incorporation of the current market conditions at that time in our methodology as described above was sufficient to estimate the allowance for loan losses as at December 31, 2016 and therefore did not further adjust historical loss experience. Economic conditions and trends: We believe that changes in national, regional and local economic business conditions impact repayment of loans. Specifically, at December 31, 2016 , the stabilizing economic conditions and trends and the reduced pressure on real estate prices were reflected in our allowance for loan losses estimated as of December 31 , 2016 , in two ways: firstly, it resulted in a lower increase in the level of past due and non -accruing loans before write - offs which affected the provisions as described above, secondly, the smoother decline in real estate prices was incorporated in our analysis, where applicable. Therefore, as at December 31, 2016 , we concluded that no further adjustment to the historical loss rates was necessary due to the current economic conditions, since the loss rates applied are long - term averages based on long recovery periods for all portfolios assessed using the homogeneous analysis. Lending policies and procedures In response to the higher volume and severity of past due loans in previous years , we reviewed and tightened our credit approval criteria since 2010 , for example by lowering both the loan - to - value and the payment - to - income acceptable ratios. As a result, we expected that the quality of new loans granted after 2009 w ould be improved. However, the loans originated during 2015 and 2016 were not significant enough to cause a change in observed probabilities of default or loss given defaults. The following tables set forth the allowances for loan losses by portfolio segment and by impairment methodology and the respective recorded investment as at December 31,2015 and December 31,2016. December 31, 2015 Consumer Commercial Total loans loans Loans Allowance for loan losses Loans Allowance for loan losses Loans Allowance for loan losses Impairment methodology: (EUR in millions) Specific - - 5,682 3,708 5,682 3,708 Coefficient - - 16,350 740 16,350 740 Homogeneous 22,067 4,887 3,476 1,464 25,543 6,351 Foreign 2,053 124 2,678 375 4,731 499 Total 24,120 5,011 28,186 6,287 52,306 11,298 December 31, 2016 Consumer Commercial Total loans loans Loans Allowance for loan losses Loans Allowance for loan losses Loans Allowance for loan losses Impairment methodology: (EUR in millions) Specific - 0 5,465 3,373 5,465 3,373 Coefficient - 0 15,914 609 15,914 609 Homogeneous 20,622 4,251 3,284 1,680 23,906 5,931 Foreign 2,048 101 2,542 387 4,590 488 Total 22,670 4,352 27,205 6,049 49,875 10,401 Collateral The most common practice we use to mitigate credit risk is requiring collateral for loans originated . We implement guidelines on the acceptability of specific classes of collateral. The principal collateral types for loans are: • mortgages over residential properties; • charges over business assets such as premises, ships; • vehicles, inventory and accounts receivable; • charges over financial instruments such as debt securities and equities; • cash collaterals; and • state, bank or personal guarantees. Longer - term finance and lending to corporate entities are generally secured; revolving credit facilities to individuals are generally unsecured. In addition, in order to mitigate the potential credit loss the Group will seek additional collateral from the counterparty as soon as impairment indicators are noticed for the relevant individual loans. Collateral dependent loans Impaired loans net of allowance for loan losses include collateral dependent loans of EUR 664 million and EUR 1,155 million at December 31, 2015 and December 31, 2016 , respectively. In general, a loan is classified as collateral dependent when repayment is expected to be provided solely by the underlying collateral and the Group anticipates foreclosing on the loan and as a result the impairment is measured based on the fair value of the collateral. In Greece, the typical length of time between classification of the loan as collateral dependent and foreclosure is about 4 years, however there are a number of cases in which this period can be prolonged because either injunctions to the foreclosure procedure are raised by the customer or third parties, or the procedure has been postponed due to a settlement or repayment. In South Eastern Europe enforcement of collateral or exhaustion of legal actions take significantly less time than in Greece . The majority of these loans are secured with properties, for which foreclosure was probable and the impairment was measured based on the fair value of the collateral. These measurements are classified as Level 3 in the fair value hierarchy. The fair value of the properties was estimated by qualified external or internal appraisers using one or more of the market approach, the income approach or the replacement cost approach. The key inputs, upon whic h these estimates are based, are market prices of similar properties, market yields and cost estimates. According to the Group impairment methodology, corporate business units that are responsible for the impairment assessment have to ensure that in cases where cash flows are expected from collateral liquidation, collateral value has to be based on a recent (within the current year) independent appraisal from a qualified appraiser, unless loan exposures are significantly lower than the collateral values. Securitized loans and Covered bonds Loans include securitized loans and loans used as collateral in the Covered Bond Programs, as follows: Securitized loans 2015 2016 Restated (EUR in millions) Receivables from Public sector (Titlos Plc — February 2009) 4,651 4,512 Mortgages (Spiti Plc — September 2011) 1,123 0 Auto loans (Autokinito Plc — September 2011) 45 0 Consumer loans (Agorazo Plc — September 2011) 739 0 SME loans (Sinepia d.a.c. – August 2016) 0 485 Total 6,558 4,997 Covered bonds 2015 2016 (EUR in millions) Mortgages 7,339 3,470 of which eligible collateral 7,009 3,411 Securitized loans The Bank, through its VIEs, has the following securitized notes in issue as at December 31, 2016: Issuer Description Type of collateral Issue date Maturity date Nominal amount in million EUR Interest rate Titlos Plc (1) Variable Rate Asset Backed Notes Receivables from Public sector February 26, 2009 September 2039 5,100 Paid semi-annually at a rate of six-month Euribor plus 50 bps Sinepia D.A.C. (2) Asset Backed Variable Rate Notes—Class A1 SME loans August 8, 2016 July 2035 150 Paid quarterly at a rate of three-month Euribor plus a margin of 185 bps Sinepia D.A.C. (2) Asset Backed Variable Rate Notes—Class A2 SME loans August 8, 2016 July 2035 35 Paid quarterly at a rate of three-month Euribor plus a margin of 185 bps Sinepia D.A.C. (2) Asset Backe |
