REPUBLIC BANK LIMITED
94
Notes to theConsolidatedFinancial Statements
For the year ended September 30, 2014. Expressed in thousands of Trinidad and Tobago dollars ($’000), except where otherwise stated
21 Risk management
(continued)
21.2 Credit risk
(continued)
21.2.3 Credit quality per category of financial assets
(continued)
Balances due from banks
The credit quality of balances due from other banks is assessed by the Group according to the level of creditworthiness of the
institution in relation to other institutions in the region. The credit quality of these balances has been analysed into the following
categories:
Superior:
These institutions have been accorded the highest rating, indicating that the institution’s capacity to meet its
financial commitment on the obligation is extremely strong.
Desirable:
These institutions have been accorded the second-highest rating, indicating that the institution’s capacity to meet
its financial commitment on the obligation is very strong.
Acceptable:
These institutions have been accorded the third highest rating, indicating that the institution’s capacity to meet its
financial commitment is adequate.
The table below illustrates the credit quality for balances due from banks as at September 30:
Superior
Desirable
Acceptable
Total
2014
4,550,906
3,680,774
113,466
8,345,146
2013
3,982,355
5,162,195
92,526
9,237,076
Advances - Commercial and Corporate
The credit quality of commercial and corporate advances is internally determined from an assessment of the counterparty based
on a combination of factors. These include the level and strength of experience of management, the track record and level of
supervision required for existing facilities of the company, the financial and leverage position of the borrowing company, the
estimated continued profitability of the company and the ability of that company to service its debts, the stability of the industry
within which the company operates and the competitive advantage held by that company in the market. The overall level of risk
thus assessed is assigned a credit score which indicates the overall quality of the Commercial/Corporate borrowing account. The
related scores for commercial and corporate advances that are neither past due nor impaired are defined as follows:
Superior:
These counterparties have strong financial position. Facilities are well secured, and business has proven track
record.
Desirable:
These counterparties have good financial position. Facilities are reasonably secured and underlying business is
performing well.
Acceptable:
These counterparties are of average risk with a fair financial position. Business may be new or industry may be
subject to more volatility, and facilities typically have lower levels of security.
Sub-standard: Past due or individually impaired.
