Off-balance sheet information
32. Irrevocable and contingent liabilities
To meet the financial needs of borrowers, FMO enters into various irrevocable commitments (loan commitments, equity commitments and guarantee commitments) and contingent liabilities. These contingent liabilities consist of financial guarantees, which oblige FMO to make payments on behalf of the borrowers in case the borrower fails to fulfill payment obligations. Though these obligations are not recognized on the statement of financial position, they are subject to credit risk similar to loans to the private sector. Therefore, provisions are calculated for financial guarantees and loan commitments according to the ECL measurement methodology.
Furthermore, the contingencies include an irrevocable payment commitment (IPC) to the Single Resolution Board (SRB) in Brussels. In April 2016, the SRB provided credit institutions with the option to fulfill part of their obligation to pay the annual ex-ante contributions to the Single Resolution Fund through IPCs.
Moreover, FMO receives guarantees from various guarantors, which participate in the risk FMO takes. For more details refer to section 'Credit risk' within the 'Risk management' chapter
The outstanding amount for financial guarantees issued by FMO and the amount of guarantees received by FMO is as follows:
2022 | 2021 | |
Contingent liabilities | ||
Encumbered funds (Single Resolution Fund) | 2,130 | 1,453 |
Effective guarantees issued | 138,359 | 69,341 |
Total contingent liabilities | 140,489 | 70,794 |
Effective guarantees received | -449,913 | -334,221 |
Total guarantees received | -449,913 | -334,221 |
Nominal amounts for irrevocable facilities are as follows:
2022 | 2021 | ||
Irrevocable facilities | |||
Contractual commitments for disbursements of: | |||
ˑ | Loans | 565,435 | 627,630 |
ˑ | Equity investments and associates | 754,898 | 701,141 |
ˑ | Contractual commitments for financial guarantees given | 180,836 | 136,450 |
Total irrevocable facilities | 1,501,169 | 1,465,221 |
The movement in exposure for the financial guarantees issued (including contractual commitments) and ECL allowance is as follows:
Movement financial guarantees1 in 2022 | Stage 1 | Stage 2 | Stage 3 | Total | ||||
Outstanding exposure/Nominal amount | ECL allowance | Outstanding exposure/Nominal amount | ECL allowance | Outstanding exposure/Nominal amount | ECL allowance | Outstanding exposure/Nominal amount | ECL allowance | |
Balance at January 1, 2022 | 203,653 | -723 | 2,138 | -36 | - | - | 205,791 | -759 |
Additions | 283,786 | -801 | - | - | - | - | 283,786 | -801 |
Exposures matured (excluding write-offs) | -169,544 | 611 | -2,169 | 783 | -27,799 | 202 | -199,512 | 1,596 |
Transfers to Stage 1 | - | - | - | - | - | - | - | - |
Transfers to Stage 2 | - | - | - | - | - | - | - | - |
Transfers to Stage 3 | -13,182 | 117 | - | - | 13,182 | -117 | - | - |
Changes to models and inputs used for ECL calculations | 398 | -524 | - | -744 | 27,807 | -10,382 | 28,205 | -11,650 |
Foreign exchange adjustments | 61 | 6 | 31 | -3 | 833 | -420 | 925 | -417 |
Balance at December 31, 2022 | 305,172 | -1,314 | - | - | 14,023 | -10,717 | 319,195 | -12,031 |
- 1 Financial guarantees represent €138,359k classified as contingent liabilities and €180,836k classified as irrevocable facilities.
Movement financial guarantees¹ in 2021 | Stage 1 | Stage 2 | Stage 3 | Total | ||||
Outstanding exposure/Nominal amount | ECL allowance | Outstanding exposure/Nominal amount | ECL allowance | Outstanding exposure/Nominal amount | ECL allowance | Outstanding exposure/Nominal amount | ECL allowance | |
Balance at January 1, 2021 | 300,939 | -1,875 | 105,612 | -2,630 | - | - | 406,551 | -4,505 |
Additions | 176,488 | -1,317 | 1,881 | -78 | - | - | 178,369 | -1,395 |
Exposures matured (excluding write-offs) | -285,081 | 964 | -107,507 | 1,922 | - | - | -392,588 | 2,886 |
Transfers to Stage 1 | - | - | - | - | - | - | - | - |
Transfers to Stage 2 | - | - | - | - | - | - | - | - |
Transfers to Stage 3 | - | - | - | - | - | - | - | - |
Changes to models and inputs used for ECL calculations | - | 1,583 | - | 797 | - | - | - | 2,380 |
Foreign exchange adjustments | 11,307 | -78 | 2,152 | -47 | - | - | 13,459 | -125 |
Balance at December 31, 2021 | 203,653 | -723 | 2,138 | -36 | - | - | 205,791 | -759 |
- 1 Financial guarantees represent €69,341k classified as contingent liabilities and €136,450k classified as irrevocable facilities.
The movement in nominal amounts for loan commitments and ECL allowances is as follows:
Movement of loan commitments in 2022 | Stage 1 | Stage 2 | Stage 3 | Total | ||||
Nominal amount | ECL allowance | Nominal amount | ECL allowance | Nominal amount | ECL allowance | Nominal amount | ECL allowance | |
Balance at January 1, 2022 | 532,219 | -2,397 | 64,972 | -880 | 10,477 | - | 607,668 | -3,277 |
Additions | 1,876,065 | -4,684 | 171,114 | -3,837 | 297 | - | 2,047,476 | -8,521 |
Exposures derecognized or matured (excluding write-offs) | -1,984,850 | 3,912 | -133,783 | 3,329 | -5,565 | - | -2,124,198 | 7,241 |
Transfers to Stage 1 | 46,138 | -506 | -46,138 | 506 | - | - | - | - |
Transfers to Stage 2 | -67,946 | 456 | 67,946 | -456 | - | - | - | - |
Transfers to Stage 3 | - | - | - | - | - | - | - | - |
Changes to models and inputs used for ECL calculations | - | 950 | - | -4,932 | - | - | - | -3,982 |
Changes due to modifications not resulting in derecognition | - | - | - | - | - | - | - | - |
Amounts written off | - | - | - | - | - | - | - | - |
Foreign exchange adjustments | 24,431 | -118 | 2,960 | 85 | 295 | - | 27,686 | -33 |
Balance at December 31, 2022 | 426,057 | -2,387 | 127,071 | -6,185 | 5,504 | - | 558,632 | -8,572 |
Movement of loan commitments in 2021 | Stage 1 | Stage 2 | Stage 3 | Total | ||||
Nominal amount | ECL allowance | Nominal amount | ECL allowance | Nominal amount | ECL allowance | Nominal amount | ECL allowance | |
Balance at January 1, 2021 | 378,990 | -3,160 | 54,904 | -1,748 | 18,360 | - | 452,254 | -4,908 |
Additions | 1,472,825 | -4,351 | 30,858 | -3,149 | 4,394 | - | 1,508,077 | -7,500 |
Exposures derecognized or matured (excluding write-offs) | -1,318,527 | 4,010 | -40,817 | 3,595 | -16,609 | - | -1,375,953 | 7,605 |
Transfers to Stage 1 | 5,233 | -836 | -5,233 | 836 | - | - | - | - |
Transfers to Stage 2 | -21,884 | 167 | 21,884 | -167 | - | - | - | - |
Transfers to Stage 3 | -3,578 | 37 | - | - | 3,578 | -37 | - | - |
Changes to models and inputs used for ECL calculations | - | 1,840 | - | -177 | - | 37 | - | 1,700 |
Changes due to modifications not resulting in derecognition | - | - | - | - | - | - | - | - |
Amounts written off | - | - | - | - | - | - | - | - |
Foreign exchange adjustments | 19,160 | -104 | 3,376 | -70 | 754 | - | 23,290 | -174 |
Balance at December 31, 2021 | 532,219 | -2,397 | 64,972 | -880 | 10,477 | - | 607,668 | -3,277 |