75 CONSOLIDATED FINANCIAL STATEMENTS 2023 Barbados Public Workers’ Co-operative Credit Union Limited Notes to the Consolidated Financial Statements March 31, 2023 (expressed in Barbados dollars) 43 13 Loans and Advances …continued In October 2015, the CAPITA Financial Services Inc. St Lucia entered into a Deed of Sale and Administration agreement with the Eastern Caribbean Home Mortgage Bank (ECHMB), wherein it sold its rights to 100% of the cash flows arising on a portfolio of loans amounting to $2,424,473. The agreement provides that the subsidiary could repurchase and replace any loan included in the loan portfolio subject to the mutual agreement of the parties. CAPITA Financial Services Inc. St Lucia has determined that substantially all the risks and rewards of the said loan portfolio have been retained by CAPITA and consequently, the loans were not derecognized. The transaction is accounted for as collateralized borrowing and the cash received from such agreement as loans payable reported in the consolidated statement of financial position (see Note 18). A portfolio of mortgage loans of CAPITA Financial Services Inc. Barbados has been pledged as security for certain customer deposits totalling $8,850,000 (2022 - $18,850,000). ii) The movement in the expected credit loss allowance is as follows: 2023 Consumer $ Business $ Mortgages $ Total $ Balance, beginning of year 39,881,096 428,772 4,744,213 45,054,081 Amounts written-off (3,857,596) (47,439) (3,905,035) Expected credit loss 1,619,401 266,888 5,009,235 6,895,524 Balance, end of year 37,642,901 648,221 9,753,448 48,044,570 2022 Consumer $ Business $ Mortgages $ Total $ Balance, beginning of year 29,742,717 801,178 7,148,009 37,691,904 Amounts written-off (166,975) – – (166,975) Expected credit loss 10,305,354 (372,406) (2,403,796) 7,529,152 Balance, end of year 39,881,096 428,772 4,744,213 45,054,081
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