BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED
NON-CONSOLIDATED ANNUAL REPORT 2015
57
BARBADOS PUBLIC WORKERS' CO-OPERATIVE CREDIT UNION LIMITED
Notes to the Non-consolidated Financial Statements
For the year ended March 31, 2015
(Expressed in Barbados dollars)
46
24. Financial Risk Management…(continued)
Credit risk…(continued)
Individually assessed allowances
The Credit Union determines the allowances appropriate for each individually significant loan or advance
on an individual basis, including any overdue payments of interest or infringement of the original terms
of the contract. Items considered when determining allowance amounts include the sustainability of the
counterpartyʼs business plan, its ability to improve performance once a financial difficulty has arisen,
projected receipts and the expected payout should bankruptcy ensue, the availability of other financial
support, the realisable value of collateral and the timing of the expected cash flows. Impairment
allowances are evaluated at each reporting date, unless unforeseen circumstances require more careful
attention.
Collectively assessed allowances
Impairment allowances are assessed collectively for losses on loans and advances, held-to-maturity
debt investments and loans and receivable investments that are not individually significant and for
individually significant loans and advances that have been assessed individually and found not to be
impaired.
The Credit Union generally bases its analyses on historical experience. However, when there are
significant market developments, the Credit Union would include macroeconomic factors within its
assessment. These factors include, depending on the characteristics of the individual or collective
assessment: unemployment rates, current levels of bad debts, changes in laws, changes in regulations,
bankruptcy trends, and other consumer data. The Credit Union may use the aforementioned factors as
appropriate to adjust the impairment allowances.
The collective assessment is made for groups of assets with similar risk characteristics, in order to
determine whether provision should be made due to incurred loss events for which there is objective
evidence, but the effects of which are not yet evident in the individual loansʼ assessments. The collective
assessment takes account of data from the loan portfolio (such as historical losses on the portfolio,
levels of arrears, credit utilisation, loan to collateral ratios and expected receipts and recoveries once
impaired) or economic data (such as current economic conditions, unemployment levels and local or
industry–specific problems). The approximate delay between the time a loss is likely to have been
incurred and the time it will be identified as requiring an individually assessed impairment allowance is
also taken into consideration.
Loans with renegotiated terms and the Credit Union’s forbearance policy
Loans with renegotiated terms are loans that have been restructured due to deterioration in the
borrowerʼs financial position, where the Credit Union has made concessions by agreeing to terms and
conditions that are more favourable for the borrower than the Credit Union has provided initially. The
Credit Union implements forbearance policy in order to maximise collection opportunities and minimise
the risk of default. Under the Credit Unionʼs forbearance policy, loan forbearance is granted on a
selective basis in situations where the debtor is currently in default on its debt, or where there is a high
risk of default, there is evidence that the debtor made all the reasonable efforts to pay under the original
contractual terms and it is expected to be able to meet the revised terms.
