Non-Consolidated Annual Report 2020

BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | NON-CONSOLIDATED ANNUAL REPORT 2020 72 BARBADOS PUBLIC WORKERS' CO-OPERATIVE CREDIT UNION LIMITED Notes to the Non-consolidated Financial Statements For the year ended March 31, 2020 (Expressed in Barbados dollars) 55 23. Financial Risk Management, continued Credit risk, continued Financial investments, continued Assessment of Corporate Investments (Term deposits), continued Loss Given Default (LGD) This methodology is based on four key states from stable, marginal, moderate and significant. These recovery rates were internally generated based on historical experience and the availability of market data. • Stable – (Stable – Caa1) - A recovery rate of 90% was indicated as a stable based on the outlook for Barbados. • Decrease – 1 (Marginal – Caa2) - 85% was used to indicate a marginal decrease in credit quality from origination, based on the financial health, stability of the company, its share price and the AML/CFT and risk assessments. • Decrease – 2 (Moderate – Caa3) - 75% was as a reflection of a moderate change from origination of the investment and historical relationship between the Credit Union and the investee. This was also based on the financial health and stability of the Company and its share price and the AML and risk assessment. • Decrease – 3 (Significant - Ca) – 50% was used given there are market indicators or events that demonstrated the company is likely to default over the medium to short term. For example, a going concern note has been disclosed in the most recent financial statements and the company's credit rating has been withdrawn or a significant decrease in the company financial health. The expected credit loss allowance computed was $60,619 (2019 - $15,538) as at March 31, 2020.