99 CONSOLIDATED FINANCIAL STATEMENTS 2026 Barbados Public Workers’ Co-operative Credit Union Limited Notes to the Consolidated Financial Statements March 31, 2026 (expressed in Barbados dollars) 67 24 Financial Risk Management …continued 24.2 Credit risk …continued 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, 2026 Performing loans ($’000) As at March 31, 2025 Performing loans ($’000) ECL - all performing loans to Stage 1 2,228 1,542 Impact of staging 1,121 903 Stage 1 and 2 ECL 3,349 2,445 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 2.5% to 3% growth in 2026, 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. The Group’s Stage 1 and Stage 2 allowance for expected credit losses on the loan portfolio as at March 31, 2026 reflects an increase, primarily driven by the higher proportion of unsecured lending within the portfolio and the associated increase in credit risk exposure. This increase was recognized despite the continued recovery observed in many economies and the overall resilience demonstrated by the Group’s loan portfolio. The IFRS 9 model could not solely be used to determine expected credit losses as it was not designed with events of this magnitude in mind. As a consequence, a model overlay was used to account for incremental expected losses not captured by the IFRS 9 model. To address the uncertainties inherent in the current environment and to reflect all relevant risk factors not captured in our model, we applied expert credit judgement in the design of the overlay and the determination of inputs used in the calculation of the allowance. We applied qualitative adjustments to macroeconomic projections, the assumed credit response of the portfolio to the macroeconomic conditions, levels of loss severity and the determination of significant increase in credit risk.
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