Measuring instability

Market risk is the possibility of incurring losses as a result of changes in the market prices of on- and offbalance-sheet positions of the trading portfolio. Bankinter measures value at risk using the historical VaR methodology using one-year data and a 95% confidence interval.

An asset portfolio's value at risk (VaR) is the estimated maximum potential loss that could be incurred for a specific time horizon with a particular confidence level. Given the instability in recent years, Bankinter has maintained the VaR limits from the previous year.

The following chart details the VaR values of the trading positions at 2017 year-end.

Moreover, the VaR of the portfolio positions of the subsidiary Línea Directa Aseguradora are monitored each month using historical simulation methodologies. The VaR of the insurance company's portfolio at 31 December was €1.25 million. The risk that may be incurred by the subsidiary Bankinter Luxembourg is also monitored. Using this same methodology, the VaR for 2018 was estimated at €0.43 million.