Non-Consolidated Annual Report 2014

BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED

NON-CONSOLIDATED ANNUAL REPORT 2014

BARBADOS PUBLIC WORKERS' CO-OPERATIVE CREDIT UNION LIMITED

Notes to the Non-consolidated Financial Statements

For the year ended March 31, 2014

(Expressed in Barbados dollars)

23. Financial Risk Management…(continued)

Credit risk…(continued)

Loans with renegotiated terms and the Credit Union’s forbearance policy…(continued)

The revised terms usually include extending maturity, changing timing of interest payments and

amendments to the terms of loan covenants. All loans are subject to the forbearance policy.

Once the loan is restructured it remains in this category independent of satisfactory performance after

restructuring. The Credit Union’s Credit Committee regularly reviews reports on forbearance activities.

Write-off policy

The Credit Union writes off a loan or an investment debt security balance, and any related allowances

for impairment losses, when it is determined that the loan or security is uncollectible. This

determination is made after considering information such as the occurrence of significant changes in

the borrower’s/issuer’s financial position such that the borrower/issuer can no longer pay the

obligation, or that proceeds from collateral will not be sufficient to pay back the entire exposure. For

smaller balance standardised loans, write-off decisions generally are based on a product-specific past

due status.

Commitments and guarantees

To meet the financial needs of customers, the Credit Union enters into various irrevocable

commitments and contingent liabilities. Even though these obligations may not be recognised on the

statement of financial position, they do contain credit risk and are therefore part of the overall risk of

the Credit Union.

Liquidity risk and funding management

Liquidity risk is defined as the risk that the Credit Union will encounter difficulty in meeting obligations

associated with financial liabilities that are settled by delivering cash or another financial asset.

Liquidity risk arises because of the possibility that the Credit Union might be unable to meet its

payment obligations when they fall due under both normal and stressed circumstances. To limit this

risk, management has arranged diversified funding sources in addition to its core deposit base, and

adopted a policy of managing assets with liquidity in mind and of monitoring future cash flows and

liquidity on a daily basis. The Credit Union has developed internal control processes and contingency

plans for managing liquidity risk. This incorporates an assessment of expected cash flows and the

availability of high grade collateral which could be used to secure additional funding if required.

The Credit Union maintains a portfolio of highly marketable and diverse assets that are assumed to be

easily liquidated in the event of an unforeseen interruption of cash flow. The Credit Union also has

committed lines of credit that it can access to meet liquidity needs.

Analysis of financial liabilities by remaining contractual maturities

The table on the following page summarises the maturity profile of the undiscounted cash flows of the

Credit Union’s financial liabilities as of March 31, 2014 and March 31, 2013 on the basis of their

earliest possible contractual maturity.