Consolidated Annual Report 2021

101 BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | CONSOLIDATED ANNUAL REPORT 2021 BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED Notes to the Consolidated Financial Statements For the year ended March 31, 2021 (Expressed in Barbados dollars) 75 25. Financial Risk Management, continued 25.2 Credit risk, continued The Group assigned probabilities and related weights based on the most likely forecasted economic outlook for the period under assessment. This probability is multiplied by a multiplier factor based on management’s professional judgement to derive the adjustment required to incorporate the forwardlooking estimate. Since Barbados received a stable outlook for the period under assessment by Moody’s and the Central Bank of Barbados, the base case scenario was the most likely scenario. Out of the sensitivity analysis of nine forecasted states, a forward-looking adjustment of 4% was applied as at March 31, 2021 Cash and balances with Central Bank The credit quality of financial institutions holding the Group’s cash resources is assessed according to the level of their credit worthiness and by comparison to other financial institutions. The Group places its cash resources with reputable financial institutions. Exposure to credit risk before collateral held or other credit enhancements The Group limits its exposure to credit risk by investing only in entities that have high credit ratings and Government of Barbados securities. Government securities are invested over a longer period than term deposits with other financial institutions which typically mature within one year. The Group has invested in FVOCI equity instruments as well, which gives it an opportunity to monitor the performance of these companies over time and make economic decisions where warranted. The Group has documented investment policies in place, which guide the management of credit risk on investments. Maximum exposure Credit risk exposures relating to on-balance sheet assets are as follows: 2021 2020 Loans and advances to customers: Consumer $ 724,716,089 753,873,695 Mortgages 555,229,124 507,451,534 Business 38,783,150 39,644,701 Financial investments: Amortized cost 27,813,739 22,024,523 Cash resources 381,844,691 308,160,914 Credit risk exposures relating to off-balance sheet items are as follows: Loan commitments 142,777,239 107,870,504 Total maximum exposure $ 1,871,164,032 1,739,025,871 The table represents the maximum credit risk exposure of the Group as of March 31, 2021 and March 31, 2020, without taking account of any collateral held or other credit enhancements attached. For on-balance sheet assets, the exposures set out above are based on net carrying amounts as reported in the consolidated statement of financial position.