92 BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED Barbados Public Workers’ Co-operative Credit Union Limited Notes to the Separate Financial Statements March 31, 2024 (expressed in Barbados dollars) 58 23 Financial risk management …continued Credit risk …continued Key inputs and assumptions: …continued The following table compares our probability-weighted estimate of expected credit losses for performing loans to expected credit losses estimated in our base case scenario. Results reflect the Stage 1 and Stage 2 allowance for credit losses. Carrying value ($’000) Base Scenario ($’000) As at March 31, 2024 ECL on performing loans 1,772 1,761 As at March 31, 2023 ECL on performing loans 2,958 2,877 Further to our current policy for transfers between stages as described in Note 2, as part of our overlay, we qualitatively increased ECL in stage 2 to reflect the current challenging economic environment. This qualitative adjustment was informed by remaining time to maturity, economic projections, scenario weights and the historical behaviour of our portfolio. The following table illustrates the impact of staging on our ECL by comparing our allowance if all performing loans were in Stage 1, to the actual ECL recorded on these. As at March 31, 2024 Performing loans ($’000) As at March 31, 2023 Performing loans ($’000) ECL - all performing loans to Stage 1 1,396 1,597 Impact of staging 376 1,361 Stage 1 and 2 ECL 1,772 2,958 Adjustments to ECL have been considered to moderate the impact of dramatic swings in economic input variables or their lagging impact on credit losses. Judgment has been required in the development and application of these overlays. Management relies on the prediction of key reputable authorities with expertise in the area. While the Barbados economy is projected to experience 4% to 5% growth in 2024, the impact of other world economies upon its tourism product and related industries remains highly uncertain. Consequently, the assumptions used to determine our allowances have a higher-than-usual degree of uncertainty. The inputs used in the calculation of the allowance are inherently subject to change, which may materially impact our estimate of the allowance for expected credit losses.
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