Exposure The level of provisioning for credit risk remains limited and well covered due to the nature of the investments, the type and rate of coverage of the guarantees which allow for recovery through the possible use of collateral. As a result, the amount provisioned as at 31 December 2024 stands at €6.8 million, compared with €7.15 million in 2023, €6 million in 2022, €6.4 million in 2021 and €8.6 million in 2020. The outstanding balance sheet total for CDL files remains under control at €16.1 million, compared with €23.7 million in 2023, €17.2 million in 2022, €10.4 million in 2021 and €12.7 million in 2020, less than 1% of the outstanding balance sheet total of €3.5 billion, compared with €3.2 billion in 2023, €3.8 billion in 2022, €3.7 billion in 2021 and €3.3 billion in 2020. Given the mainly secured nature of our commitments, capital consumption remains low, with RWA allocated to credit risk remaining below the appetite threshold defined for the business. MARKET RISK Market risk reflects the risk of losses in the value of financial instruments resulting from changes in market parameters such as exchange rates, interest rates, securities prices, derivatives and other assets. The system for supervising client transactions and proprietary trading is based on first-level control of market operators and the risk department (Risk and Permanent Control Department) of CFM Indosuez Wealth. It should be noted that part of the MAM business was transferred to CAIWE on 3 September, mainly to monitor the Treasury business (limit set monitoring). Advisory business and collateral values continue to be monitored locally. The main tasks of CFMI's MAM department as at 31 December 2024 are as follows: · Daily monitoring of compliance with the limits granted to the bank's customers; · Monitoring of atypical or unauthorised transactions; · Organising a monthly market committee meeting at which risk monitoring metrics are presented. · Monitoring of collateral values. During the 2024 financial year, few limits were exceeded and these were quickly rectified. Furthermore, although the market RWA level rose slightly to €5 million (following the purchase of securities in the HTC book) compared with 2023 (€1.5 million), it remains well below the alert threshold of €45 million. In fact, the HQLA portfolio at year-end amounted to €288 million, compared with €31 million as at 31 December 2023. Management and Corporate clients. The Risk and Permanent Control Department manager has the same level of signing authority as the Managing Director. After being analysed and reviewed locally, loan files whose characteristics exceed CFM Indosuez's level of delegation are subject to an arbitration procedure and escalated to the Indosuez Wealth group and, where appropriate, to CACIB's RPC/DRI. Monitoring Credit and counterparty risks at CFM Indosuez Wealth are monitored by the Risk and Permanent Control Department, which reports operationally to the Chief Executive Officer and in terms of line management to the Indosuez Wealth Risk and Permanent Control function. Counterparty risk is focused on the customer lending business and is part of Wealth Management business line’s risk management strategy, approved by the governing bodies of CA CIB and CA SA and transposed in Indosuez Wealth Group’s Framework Directive. Credit risk management mechanisms Guarantees received and collateral Collateral is created by pledging assets held in the Bank's books (bonds, shares, other securities, deposits) that meet certain specific conditions (approved, liquid, continuously valued, pledged in favour of the Bank, rating, etc.), by taking out bank guarantees, life insurance policies assigned or delegated in favour of the Bank (provided that the underlying assets are eligible for pledge value). The collateral value of pledged financial instruments is defined according to the level of liquidity, volatility, issuer quality (S&P rating, Moody's), risk profile, etc. Equity securities subject to collateral value must also be listed on approved stock exchanges and indices (excluding the second market, open market or new market). In addition, rules governing the diversification and concentration of collateral must be complied with. Monitoring process The risk measurement and monitoring system is based on a periodic review of facilities granted, a quarterly sensitive business committee meeting and daily monitoring of compliance with limits. This monitoring of counterparty risk (compliance with limits, monitoring of collateral, etc.) is carried out at a second level by the Credit Risk Manager, who checks it and reports to General Management. CFM Indosuez Wealth Management 46
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