87 BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED | SEPARATE FINANCIAL STATEMENTS 2022 BARBADOS PUBLIC WORKERS' CO-OPERATIVE CREDIT UNION LIMITED Notes to the Separate Financial Statements For the year ended March 31, 2022 (Expressed in Barbados dollars) 60 23. Financial Risk Management, continued Credit risk, continued The Credit Union offered borrowers cash flow relief through loan payment moratoria which allowed for a deferral of loan payments while interest continued to accrue on outstanding balances. The initial moratoria periods ranged from three to six months and were intended for members who faced financial difficulty due to COVID-19 but who were previously in good standing. Loans subject to moratoria were not treated as non-performing during the deferral period. The moratoria programme adopted an opt-in approach where members were required to request the moratoria if needed. Early observations of payment behaviour related to loans where moratoriums expired during this year were considered in the assessment of the longer-term probability of the members’ ability to pay, a key input in determining migration. All payment deferrals ended on March 31, 2022 and the organization remains committed to providing support to financially challenged members through the below options: • extension of loan terms • converting outstanding interest to a separate loan and / or • consolidation of debt Modifications The terms and conditions related to the payment deferrals were assessed to determine if they represented substantial modifications. Where required, modification gains or losses have been recognised. The ECL methodology, model inputs, significant increase in credit risk (SICR) thresholds, and definition of default remain consistent with those used as at March 31, 2021. Forward-looking information, scenarios and associated weightings, were revised to reflect the unprecedented impact of the COVID-19 pandemic, and the resulting significant uncertainty as it relates to current conditions and outlook. The Credit Union groups its loans based on there risk characteristics and in so doing is able to evaluate whether a SICR has occur based on the following characteristics: 1) The borrower is in default greater than 30 days where prior to the evaluation period they were in default 30 days or less 2) Based on a 1,000-basis points increase in the groups 95% Confidence Interval Factor (CIF). While the Credit union currently has a number of loan products these are assessed for risk purposes in three categories: 1) Consumer loans 2) Business loan 3) Mortgages Additionally, the credit union accessed these by categories at the product level for any significant increases in credit risk based on the 95% CIF.
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