94 BARBADOS PUBLIC WORKERS’ CO-OPERATIVE CREDIT UNION LIMITED Barbados Public Workers’ Co-operative Credit Union Limited Notes to the Separate Financial Statements March 31, 2026 (expressed in Barbados dollars) 69 23 Financial risk management …continued Credit risk …continued Assessment of Amortised Cost Fixed Income Securities …continued Key data sources, as outlined in the expected credit loss assessment methodology, were obtained from Moody’s, a global credit rating agency that provided published statistics and data on corporate and sovereign bonds and Corporate investments. The expected credit losses computed were $115,370 (2025 - $174,116) as at March 31, 2026 (Note 10). Incorporation of Forward-Looking Information Assessment In measuring expected credit losses (ECL) in accordance with IFRS 9, the Credit Union incorporates reasonable and supportable forward looking information that is available without undue cost or effort. Forward looking information is used to assess changes in credit risk and to support the estimation of expected credit losses over the life of financial assets. The Credit Union applies a structured, forward looking scorecard that combines external macroeconomic indicators and internal, exposure specific credit indicators to support a consistent, transparent, and well governed assessment of credit risk. The framework assigns a 40% weighting to external indicators and a 60% weighting to internal indicators, reflecting management’s assessment that internal financial performance and credit quality metrics are the primary drivers of default risk, while macroeconomic conditions provide important contextual insight. 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.
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