108 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) 76 24 Financial Risk Management …continued 24.2 Credit risk …continued Incorporation of Forward-Looking Information Assessment External indicators (40%) reflect prevailing economic and market conditions relevant to the jurisdictions in which the Credit Union has exposures. These indicators include measures such as real gross domestic product (GDP) growth, inflation trends, sovereign or regional credit developments, and broader market or structural conditions. External inputs are derived from authoritative public sources, including published central bank economic reviews and, where applicable, sovereign or regional credit assessments, and are evaluated using a standardised scoring framework. Internal indicators (60%) focus on the specific risk characteristics of each exposure and include, among other factors, trends in revenue and profitability, operating risk profile, asset quality, balance sheet leverage, liquidity and management effectiveness, and movements in internal or external credit ratings. These indicators are supported by approved internal credit assessment frameworks, financial performance analysis, and internal rating matrices. The combined outcome of the external and internal indicators forms part of management’s overall forward looking assessment used in the estimation of expected credit losses. While the scorecard provides a structured and quantitative framework, management continues to apply judgment, where appropriate, to reflect qualitative factors or exposure specific circumstances that may not be fully captured by quantitative metrics. Such judgments are documented and subject to appropriate governance oversight. Management considers that this forward-looking approach enhances the consistency, objectivity, and auditability of the expected credit loss estimation process and supports compliance with IFRS 9’s requirement to incorporate forward looking information. Exposure to credit risk before collateral held or other credit enhancements The Credit Union 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 Credit Union has invested in FVOCI equity instruments as well, which gives it an opportunity to monitor the performance of these companies over time and make economic decisions where warranted. The Credit Union has documented investment policies in place, which guide the management of credit risk on investments.
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