100 BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED Barbados Public Workers’ Co-operative Credit Union Limited Notes to the Consolidated Financial Statements March 31, 2026 (expressed in Barbados dollars) 68 24 Financial Risk Management …continued 24.2 Credit risk …continued Key inputs and assumptions The measurement of expected credit losses is a complex calculation that involves a large number of inputs and assumptions. The key drivers of changes in expected losses include the following: • Forward looking macroeconomic projections; • Recent portfolio performance; • Scenario design and the weights associated with each scenario; and • Transfers between stages, which can result from changes in any of the above inputs. Forward looking macroeconomic projections The PD and LGD inputs used to predict expected credit losses are primarily based on GDP growth projections. The assumed level of response of the PD to the level of economic contraction was informed by historical events, recent portfolio performance and expert judgement. The LGDs used in the calculation of the Group allowance were qualitatively adjusted upwards to reflect higher expected time to resolution for future defaults secured with real estate collateral. The Group allowance for credit losses reflects the Group economic outlook as at March 31, 2026. Subsequent changes to these forecast and related estimates will be reflected in the Group allowance for credit losses in future periods. The Group base scenario accounts for the expected gradual recovery of the Barbados economy during 2025 - 2026 and for continued expansion in the economy thereafter, with non-performing loans maintaining a downward trajectory for the 2026 - 2027 fiscal. The Group downside scenario adjusts for negative trends which can adversely affect the future of the Barbadian economy. The Group upside scenario considers a marginal improvement on base conditions resulting from fasterthan-expected economic recovery. The forecasts of GDP growth rates were informed by external economic projections of key regulatory authorities. Internal assessment of the level of member resilience: The PDs used are specific to the type of loan and automatically adjusted for the borrowers’ position during the financial year. This adjustment was reflective of the main economic sector impacted by unemployment. Recent portfolio performance The PDs used are specific to the portfolio segments and automatically adjusted to take-into account recent portfolio performance. Portfolios which have shown high resilience to adverse economic conditions would have a lower PD level than portfolios with higher default rates. Changes in scenario design and the weights associated with each scenario All scenarios considered in our analysis include the impact of the economic conditions as at March 31, 2026; reflective of current economic conditions. In determining our IFRS 9 allowance for credit losses, we reassessed our scenario weights to more heavily weigh the downside scenarios contrast to that which was predicted.
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