99 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) 67 25 Financial Risk Management …continued 25.2 Credit risk …continued Loans and advances The Group employs a range of policies and practices to mitigate credit risk relating to loans and advances. The most traditional of these is the taking of security for funds advanced. The principal collateral types for loans and advances within the Group are: - Mortgages over residential properties - Charges over financial instruments such as debt securities and equities - Charges over business assets such as premises - Hypothecation of deposit balances It is the Group’s policy to dispose of repossessed properties in an orderly fashion. The proceeds are used to reduce or repay the outstanding claims. The Group does not occupy repossessed properties for business use. Generally, the Group updates the valuation of property held against exposures to members on inception of the loan. However, a more formal valuation is performed, when: - loan is 90 days past due and is deemed to have experienced a significant increase in credit risk; and/or - the valuation is required to provide input into determining management’s credit risk actions. Assets obtained by taking possession of collateral Details of financial and non-financial assets obtained by the Group during the year by taking possession of collateral held as security against loans and advances and held at the year-end are shown below. 2023 $ 2022 $ Collateral repossessed during the year and held at year-end 8,340,025 5,901,866 Financial investments 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 also invested in FVOCI equity instruments 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.
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