Note 3

Losses and impairments on loans and guarantees

Sparebanken Møre applies a three-stage approach when assessing ECL on loans to customers and guarantees in accordance with IFRS 9.  

  • Stage 1: At initial recognition and if there’s no significant increase in credit risk, the commitment is classified in stage 1 with 12-months ECL
  • Stage 2: If a significant increase in credit risk since initial recognition is identified, but without objective evidence of loss, the commitment is transferred to stage 2 with lifetime ECL measurement
  • Stage 3: If the credit risk increases further and there’s objective evidence of loss or if individual impairments have been made, the commitment is transferred to stage 3.

ECL on loans and guarantees are presented in the balance sheet as a reduction to «Loans to and receivables from credit institutions» and ECL on guarantees are recognised under «Other provisions for incurred liabilities and costs».

The methodology for measuring expected credit losses (ECL) in accordance with IFRS 9 is explained in the interim report for the 1st quarter. Tables showing the transition effects of the implementation of IFRS 9 are presented in Note 2.6 in the Annual Report 2017.  

Specification of credit loss expense     
GROUPQ2 2018Q2 201730.06.201830.06.201731.12.2017
Changes in collective impairment during the period (IAS 39)--40--40-45
Changes in ECL during the period - Stage 1-1-1--
Changes in ECL during the period - Stage 220-17--
Changes in ECL during the period - Stage 3-17--23--
Increase in existing individual impairments03045
New individual impairments252145365
Confirmed losses, previously impaired0352425
Reversal of previous individual impairments-9-12-16-39-49
Confirmed losses, not previously impaired012918
Total impairment on loans and guarantees, etc-56-3813
Commitments (exposure) divided into risk groups based on probability of default
GROUPStage 1Stage 2Stage 3Total 30.06.2018
Low risk (0 % - < 0.5 %)46 5761 747048 322
Medium risk (0.5 % - < 3 %)5 5772 0781 2588 913
High risk (3 % - <100 %)6634901071 260
Problem loans00345345
Total commitments before ECL52 8164 3141 71058 841
- ECL-25-64-247-335
Net commitments *)52 7914 2501 46458 505
*) The table above is based on exposure at the reporting date, not including fixed rate loans assessed at fair value. The figures are thus not reconcilable against balances in the statement of financial position.
Changes in ECL in the period    
GROUPStage 1Stage 2Stage 3Total
Total impairments at 31.12.2017 according to IAS 39   336
Effect of transition to IFRS 9   7
ECL 01.01.2018 according to IFRS 92447272343
New commitments94215
Disposal of commitments-4-6-10-20
Changes in ECL in the period for commitments which have not migrated-5-590
Migration to stage 13-14-7-18
Migration to stage 2-240-2513
Migration to stage 30-264
Changes in individual impairments---2-2
ECL 30.06.20182564247335
- of which expected losses on loans   236
- of which expected losses on guarantees   99