ICC BANKING COMMISSION MIAMI MEETING 2018: Day 2 @ 11:15 - ICC Trade Register 2017

POLICY AND BUSINESS PRACTICES
Banking Commission
ICC TRADE REGISTER 2017
Summary of Findings
February 2018

1
Acknowledgements
Conclusions and Evolution of Trade Register
Export Finance Findings
Trade Finance Findings
Introduction to 2017 Trade Register
AGENDA

2
INTRODUCTION TO THE TRADE REGISTER
ICC Trade Register aims to provide an objective, transparent and robust view of the risk profile and characteristics of Trade and
Export Finance with the intention of contributing to informed policy and regulatory decisions.
The Trade Register also aims to deliver a common understanding of the international regulations affecting bank capital
requirements for Trade and Export Finance as part of the ICC’s commitment to effective and collaborative advocacy.
ICC Trade Register analysis focused on credit-related risk across the following products:
• Trade Finance: Import LCs, Export LCs, Loans for Import / Export, Performance Guarantees
• Export Finance: Export Loans backed by Export Credit Agencies (ECAs) based in OECD-member countries for commercial and /
or political risk
The Trade Register database is continually growing, with the total exposures exceeding USD 11 trillion this year, across over
20 million transactions
• Combination of Import L/Cs, Export L/Cs, and Performance Guarantees equals approximately 40% of global traditional Trade
Finance Flows
We continue our strategic partnership with The Boston Consulting Group (BCG) and Global Credit Data (GCD) in the
2017 Trade Register report
Source: ICC Global Annual Survey, bank interviews

3
Acknowledgements
AGENDA

4
0.10%
0.02%
0.27%
0.02%
0.02%
OVERVIEW OF OBLIGOR-WEIGHTED FINDINGS IN 2017 REPORT
TRADE FINANCE REMAINS A LOW RISK PRODUCT
1. Accounts for 7.6% observed 'Claim Rate', using alternative methodology to 2015 report
Note: Figures based on defaults by obligor. LGD is exposure-weighted and applies 9% discount rate.
Source: ICC Trade Register 2017
0.47%
0.47%
0.05%
0.38%
0.80% 100
100
100
100
7.6
Exposure-weighted
default rate
Exposure at
default
Loss given
default Expected loss
Import LC
Export LC
Loans for import/export
Performance Guarantees
(applying CCF to EAD)
(applying CCF to LGD)
5%1
34%
60%
36%
26%

5
0.02%
0.01%
0.07%
0.01%
0.01%
EXPOSURE-WEIGHTED EXPECTED LOSS REMAINS LOW DUE TO
LOW DEFAULT RATES
Note: Figures based on defaults by exposure. LGD applies 9% discount rate.
0.24%
0.24%
0.03%
0.07%
0.22% 100
100
100
100
7.6
Exposure-weighted
default rate
Exposure at
default
Loss given
default Expected loss
Import LC
Export LC
Loans for import/export
5%1
34%
60%
36%
26%

6
TRADE FINANCE DEFAULT RATES COMPARE FAVOURABLY TO SIMILAR
ASSET CATEGORIES
Exposure Weighted, 2008-2016
Default rate LGD Expected Loss Time to recovery
Note: Based on 2008-2016 data for Trade Finance, and 2000-2015 data for other products. Default rate is exposure weighted for Trade Finance
products and obligor-weighted for other products. LGD is exposure weighted. 1. Accounts for 7.6% observed 'Claim Rate' (i.e. applying CCF to LGD)
0.07%
0.24%
0.22%
0.20%
0.20%
0.03%
0.50%
0.10%
Trade Finance Other Products
36%
33%
28%
25%
5%1
28%
34%
26%
3 bps
6 bps
14 bps
5 bps
7 bps
1 bps
2 bps
1 bps
184 days
123 days
61 days
444 days
111 days
436 days
457 days
411 days
Product/Asset Category
Import L/Cs
Export L/Cs
Loans for Import/Export
Small / Medium Enterprise
Large Corporate
Banks & FIs
Commodities Finance

7
OBLIGOR-WEIGHTED DEFAULT RATES DECLINING ACROSS ALL
PRODUCTS IN 2016
Import L/Cs
Export L/Cs
Loans for
Import/Export
Obligor-weighted Exposure-weighted Transaction-weighted
Performance
Guarantees
0.45%
0.61%0.61%
0.42%
0.0
0.4
0.8
1.2
2015 20162013 2014
0.88%0.93%
1.10%
0.61%
0.0
0.4
0.8
1.2
0.06%0.08%0.03%0.06%
0.0
0.4
0.8
1.2
0.48%0.50%0.43%
0.28%
0.0
0.4
0.8
1.2
0.55%
0.38%
0.13%0.20%
0.0
0.4
0.8
1.2
2015 201620142013
0.29%0.32%0.23%0.17%
0.0
0.4
0.8
1.2
0.01%0.11%0.01%0.01%
0.0
0.4
0.8
1.2
0.03%0.11%0.13%
0.04%
0.0
0.4
0.8
1.2
0.12%
0.24%0.23%0.23%
0.0
0.4
0.8
1.2
20152014 20162013
0.28%0.24%
0.36%
0.22%
0.0
0.4
0.8
1.2
0.01%0.03%0.01%0.01%
0.0
0.4
0.8
1.2
0.22%0.14%0.10%0.09%
0.0
0.4
0.8
1.2

8
IMPORT L/Cs | DEFAULT RATES WEIGHTED BY REGION
SLIGHT DECLINE IN OBLIGOR DEFAULTS MOSTLY DRIVEN BY EUROPE
0.6
0.4
0.0
0.2
2013 20152014
(%)
2016
0.2
0.4
0.0
0.6
(%)
2016201520142013
0.4
0.0
0.2
0.6
(%)
201620142013 2015
Note: Regions and Countries reflect those of Obligor
APACAfrica Middle East OtherNorth AmericaEuropeCentral & South America
Default rate weighted by obligor Default rate weighted by exposure Default rate weighted by transaction

9
EXPORT L/Cs | DEFAULT RATE WEIGHTED BY REGION
OBLIGOR-WEIGHTED DEFAULTS DECLINE IN ALL REGIONS EXCEPT AFRICA
0.00
0.08
0.04
0.12
(%)
2015 20162013 2014
0.08
0.04
0.12
0.00
20142013
(%)
2015 2016
0.12
0.00
0.08
0.04
(%)
2014 20152013 2016
Africa North AmericaAPAC Middle EastEuropeCentral & South America Other

10
LOANS FOR IMPORT/EXPORT | DEFAULT RATE WEIGHTED BY REGION
DECLINE IN OBLIGOR DEFAULTS DRIVEN BY APAC, THE AMERICAS
0.0
0.4
0.8
1.2
20142013 20162015
(%)
1.2
0.8
0.0
0.4
(%)
20152013 2014 2016
0.4
0.0
0.8
1.2
(%)
2015 201620142013
Middle East OtherAPAC Central & South America Europe North AmericaAfrica

11
PERF. GUARANTEES | DEFAULT RATE WEIGHTED BY REGION
DECLINE IN OBLIGOR DEFAULTS SPREAD ACROSS APAC, EUROPE, AND THE AMERICAS
0.00
0.50
0.25
0.75
(%)
2016201520142013
0.00
0.50
0.25
0.75
(%)
2016201520142013
0.25
0.50
0.75
0.00
(%)
2016201520142013
OtherMiddle East North AmericaEuropeCentral & South AmericaAPACAfrica

12
9%
9%
9%
9%
9%
DEEP DIVE: FACTORS DRIVING LOSS GIVEN DEFAULT
42.3%
67.4%
42.3%
70.5%
79.0%
200 bps
200 bps
200 bps
200 bps
200 bps 26.3%
36.3%
33.5%
60.3%
4.6%1
Exposure-weighted
recovery rate
Cost of
recovery
Average time
to recovery Discount rate LGD
0.50 years
0.30 years
0.34 years
2008-2016
Import L/Cs
Export L/Cs
Loans for Import/Export
0.17 years
0.17 years
x 7.6%
claim rate

13
Acknowledgements
AGENDA

14
EXPORT FINANCE DEFAULT RATES REMAIN LOW, SLIGHT GROWTH
MOSTLY DRIVEN BY SOVEREIGN DEFAULTS
Default rate by Exposure Default rate by Obligors Default rate by Transactions
1.0
1.5
0.5
0.0
0.07
FI
1.17
0.14
0.44
0.50
Specialised
0.430.42
Sovereign
1.24
0.45
Corporate
0.55
Default rate (%)
Total
2007-20162007-2015
0.0
0.5
1.5
1.0
Total
0.95
0.90
0.96
1.03
1.37
0.26
FICorporate
1.41
0.43
0.60
Specialised
0.56
Sovereign
Default rate (%)
1.0
0.0
1.5
0.5
Total
0.82
Specialised
1.43
Corporate
0.14
0.76
0.67
0.30
FI
0.55
Sovereign
1.36
Default rate (%)
0.79
0.84
Total '16 357m 50m 119m 150m 675m
Defaults '16 2.0m 0.6m 0.2m 0.6m 3.4m
8,727 3,658 2,104 3,189 17,678
90 50 9 19 168
18,301 7,583 6,078 8,478 40,440
153 103 18 57 331

15
THE AMERICAS AND AFRICA HAVE SEEN LARGEST INCREASES IN
DEFAULT RATES, SLIGHT GROWTH IN APAC
Note: Regions and Countries reflect those of Obligor. Ex-CIS countries: Russia , Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Republic Of, Russian Federation,
Turkmenistan, Ukraine, Uzbekistan Source: ICC Trade Register 2017
Default rate by Exposure Default rate by Obligors Default rate by Transactions
1.5
3.0
2.0
2.5
0.0
0.5
1.0
Default rate (%)
0.44
0.11
0.50
North
America
Total
0.55
1.10
1.01
0.37
0.27
ex-CISEurope
(ex-CIS)
0.34 0.37
1.08
0.34
Central/
S. Amer.
0.99
0.17
Africa
0.41
0.04
Middle
East
APAC
2007-20162007-2015
2.5
1.0
0.0
1.5
2.0
0.5
3.0
0.95
Default rate (%)
Africa
0.57
North
America
0.55
2.64
ex-CIS TotalAPAC
0.90
1.28
Europe
(ex-CIS)
Middle
East
0.47
2.44
1.00
0.07
1.23
0.60
0.53
Central/
S. Amer.
0.90
0.67
0.85
2.0
1.5
1.0
2.5
0.5
0.0
3.0
Default rate (%)
0.76
Europe
(ex-CIS)
North
America
Total
0.56
1.30
0.82
0.07
2.29
ex-CIS
0.550.58
Central/
S. Amer.
0.62
Middle
East
1.23
0.34
Africa
0.56 0.49
APAC
0.39
0.76
2.16
Total '16 74m 156m 97m 138m 73m 66m 70m 675m
Defaults '16 0.3m 0.6m 0.5m 0.5m 0.7m 0.7m 0.1m 3.4m
1.8k 3.2k 2.1k 3.5k 4.3k 1.4k 1.5k 17.7k
16 19 21 19 53 33 7 168
4.7k 9.2k 5.1k 7.4k 7.0k 3.8k 3.2k 40.4k
36 36 32 41 86 82 18 331

16
SPIKE IN BRAZIL IS DRIVING GROWTH IN 2016, RECENT DEFAULTS IN
SINGAPORE AND SPAIN HAVE SUBSIDED
Backup
0.0%
1.0%
0.5%
1.5%
Av. 2007-2016:
0.48%
0.97%
1.06%
2011
0.15%
0.47%
2016201320102008 20152012 201420092007
0.69%
0.52%
0.28%
0.32%0.34%
0.01%
SpainBrazil Iran OtherRussiaSingaporeCanada
Defaults by Exposure (Weighted by Country)

17
EXPORT FINANCE CONTINUES TO HAVE LOW EXPECTED LOSS RATES AS
ECA BACKING REMAINS HIGH
ECA
Recoveries
Customer
Recoveries
Total
Recoveries
Loss
Rate Discount Costs
ECA completed/
accelerated and partial
completed cases
96.2% 0.8% 96.9% 3.1% 1.3% 1%
ECA completed and
customer completed
cases
97.7% 1.7% 99.4% 0.6% 2.2% 1%
Default Rate
by Exp.
(PD)
Exposure
at Default
(EAD)
Loss Given
Default
(LGD)
Expected
Loss
(EL)
0.50% 100% 5.31% 0.026%
0.50% 100% 3.75% 0.019%

18
BACKUP: AVERAGE ECA INSURANCE COVERAGE RATE BY ASSET
CATEGORY AND REGION
93% 95% 96% 94%
5% 6%
0
20
40
60
80
100 4%7%
SOVEREIGNFI SPECIALIZEDCORPORATE
% insurance coverage rate
CoveredUncovered
94% 94% 94% 93% 93% 94% 95%
6% 7% 7% 6% 5%
Africa
6%
North Americaex-CIS Middle EastAPAC Central &
South America
6%
Europe
94%
Av.
2007 - 2016
RegionAsset Category

19
Acknowledgements
AGENDA

20
CONCLUSIONS AND KEY TAKEAWAYS
Trade Finance plays an essential role in enabling and supporting global trade flows, by providing both financing and risk
mitigation for importers and exporters often transacting with unknown and distant counterparties.
The ICC Trade Register plays and important role in providing up-to-date, accurate, and detailed information on the products'
risk profiles and industry trends. These finding are essential for informing policy and regulatory decisions, and broadening the
awareness and understanding of the risk and regulation associated with Trade and Export finance
The 2017 ICC Trade Register supports findings from previous years – Trade and Export Finance present banks with short
average maturities and low credit risk, with low default rates, LGD and EL. Nevertheless, it was noted that:
• For Trade Finance, obligor-weighted default rates declined across all products, and as a result Trade Finance maintained its low
Expected Loss rates
• Export Finance saw growth in default rates primarily due to a Sovereign default in Africa and an isolated incident in Brazil, however
a slight reduction in Loss Given Default resulted in broadly similar Expected Loss rates to last year
The ICC will continue to leverage these findings to encourage appropriate treatment of Trade and Export Finance by regulators;
an important role given the evolution of the regulatory environment through measures such as IFRS 9 and Basel III Finalisation
Looking forward, the ICC plans to continue improving the Trade Register across several dimensions, including:
• Expanding scope to include Supply Chain Finance in the 2018 report, and continuing to discuss the inclusion of non-OECD ECAs
and transactions covered by certain multi-laterals
• New data gathering infrastructure to be rolled out with the support of GCD to enhance the quality of the data set and improve our
return to members
Source: ICC Global Annual Survey, bank interviews

21
Acknowledgements
AGENDA

22
ACKNOWLEDGEMENTS
Trade Register Member Banks
• AKA Bank
• ANZ
• Bank of America
Merrill Lynch
• Bank of China
• Barclays
• BMO Financial Group
• BNP Paribas
• Credit AricoIe CIB
• Deutsche Bank
• HSBC
• ING
• J.P. Morgan Chase
Trade Register Project Team
Chair ICC Trade Register Project
• Krishnan Ramadurai, Chair of ICC Trade Register Project, Global Head of
Capital Management for Trade & Receivable Finance HSBC Bank plc
Technical Advisors, ICC Trade Register Project
• Alexander Malaket, Deputy Head of the Executive Committee, ICC Banking
Commission, President, OPUS Advisory Services International Inc.
• Henri d'Ambrières, Senior Technical Advisor, Export Finance, HDA Conseil
• Hugo Verschoren, Senior Technical Advisor, Trade Finance, ING
Project Management, ICC Banking Commission
• David Bischof, Senior Policy Manager, ICC Banking Commission
Boston Consulting Group
• Sukand Ramachandran, Partner and Managing Director
• Jarryd Porter, Project Leader
• Ravi Hanspal, Consultant
• Campbell Leckie, Consultant
Global Credit Data
• Philip Winckle, Executive Director
• Robert Korako, Methodology and Membership Executive
• Michaël Dhaenens, Data Operations Executive
• KfW IPEX-Bank
• Mizuho
• Rand Merchant Bank
• Santander
• Société Generale
• Standard Bank
• Standard Chartered
Bank
• Sumitomo Mitsui
Banking Corp.
• UniCredit
• Wells Fargo

Banking Commission
THANK YOU

ICC BANKING COMMISSION MIAMI MEETING 2018: Day 2 @ 11:15 - ICC Trade Register 2017

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