32.2. Credit and default risk

The credit and default risk arising from financial assets involves the risk of default by counterparties, and therefore comprises at a maximum the amount of the claims under positive fair values receivable from them and the irrevocable credit commitments. The risk arising from non-derivative financial instruments is accounted for by recognizing bad debt losses. Cash and capital investments and derivatives are only entered into with prime-rated national and international counterparties. Risk is additionally limited by a limit system based on credit assessments by the international rating agencies and on the equity base of the counterparties concerned.

There were no material concentrations of risk in fiscal year 2008 due to the global allocation of the Group’s business activities and the resulting diversification.

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CREDIT AND DEFAULT RISK RELATING TO FINANCIAL ASSETS
BY GROSS CARRYING AMOUNT

 

 

 

 

€ million

 

Neither  past due  nor  impaired

 

Past due  and not  impaired

 

Impaired

 

Dec. 31,  2008

 

Neither past due  nor  impaired

 

Past due  and not  impaired

 

Impaired

 

Dec. 31,  2007

Measured at amortized cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial services receivables

 

55,838

 

2,587

 

1,923

 

60,348

 

50,298

 

2,254

 

1,782

 

54,334

Trade receivables

 

4,724

 

1,136

 

388

 

6,248

 

4,747

 

873

 

286

 

5,906

Other receivables

 

11,158

 

161

 

242

 

11,561

 

14,402

 

205

 

406

 

15,013

 

 

71,720

 

3,884

 

2,553

 

78,157

 

69,447

 

3,332

 

2,474

 

75,253

There are no overdue financial instruments measured at fair value in the Volkswagen Group. As a consequence of the fluctuations in fair value caused by the financial crisis, securities measured at fair value with a cost of €363 million were individually impaired in fiscal year 2008.

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CREDIT RATING OF THE GROSS CARRYING AMOUNTS OF FINANCIAL ASSETS
THAT ARE NEITHER PAST DUE NOR IMPAIRED

 

 

€ million

 

Risk class 1

 

Risk class 2

 

Dec. 31,  2008

 

Risk class 1

 

Risk class 2

 

Dec. 31,  2007

Measured at amortized cost

 

 

 

 

 

 

 

 

 

 

 

 

Financial services receivables

 

47,651

 

8,187

 

55,838

 

42,493

 

7,805

 

50,298

Trade receivables

 

4,724

 

0

 

4,724

 

4,747

 

0

 

4,747

Other receivables

 

11,153

 

5

 

11,158

 

14,401

 

1

 

14,402

Measured at fair value

 

7,395

 

 

7,395

 

8,882

 

 

8,882

 

 

70,923

 

8,192

 

79,115

 

70,523

 

7,806

 

78,329

The Volkswagen Group performs a credit assessment of borrowers in all loan and lease agreements, using scoring systems for the high-volume business and rating systems for corporate customers and receivables from dealer financing. Receivables rated as good are contained in risk class 1. Receivables from customers whose credit rating is not good but have not yet defaulted are contained in risk class 2.

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MATURITY ANALYSIS OF THE GROSS CARRYING AMOUNTS OF FINANCIAL ASSETS
THAT ARE PAST DUE AND NOT IMPAIRED

 

 

past due by:

 

Gross
carrying amount

€ million

 

up to 30 days

 

30 to 90 days

 

more than
90 days

 

Dec. 31, 2007

Measured at amortized cost

 

 

 

 

 

 

 

 

Financial services receivables

 

1,898

 

351

 

5

 

2,254

Trade receivables

 

589

 

145

 

139

 

873

Other receivables

 

122

 

27

 

56

 

205

Measured at fair value

 

 

 

 

 

 

2,609

 

523

 

200

 

3,332

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past due by:

 

Gross
carrying amount

€ million

 

up to 30 days

 

30 to 90 days

 

more than
90 days

 

Dec. 31, 2008

Measured at amortized cost

 

 

 

 

 

 

 

 

Financial services receivables

 

1,843

 

584

 

160

 

2,587

Trade receivables

 

668

 

278

 

190

 

1,136

Other receivables

 

74

 

29

 

58

 

161

Measured at fair value

 

 

 

 

 

 

2,585

 

891

 

408

 

3,884

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CARRYING AMOUNTS OF FINANCIAL INSTRUMENTS THAT WOULD
OTHERWISE BE PAST DUE WHOSE TERMS HAVE BEEN RENEGOTIATED

€ million

 

Dec. 31, 2008

 

Dec. 31, 2007

Measured at amortized cost

 

 

 

 

Financial services receivables

 

849

 

478

Trade receivables

 

 

12

Other receivables

 

 

Measured at fair value

 

 

 

 

849

 

490

Collateral that met the recognition criteria under IFRSs was recognized in the balance sheet in the amount of €225 million in fiscal year 2008 (previous year: €174 million). This mainly relates to vehicles.

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