REPUBLIC BANK LIMITED
96
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)
Financial investment securities
The debt securities within the Group’s investment security portfolio are exposed to credit risk. The credit quality of each individual
security is internally assessed based on the financial strength, reputation and market position of the issuing company and the
ability of that company to service the debt. The level of credit risk thus assessed and associated with the security is assigned a risk
premium. These premiums are defined as follows:
Superior:
Government and Government Guaranteed securities, securities secured by a Letter of Comfort from the Government
and securities placed with institutions that have been accorded the highest rating by an international rating agency.
These securities are considered risk free.
Desirable:
Corporate securities that are current and being serviced in accordance with the terms and conditions of the
underlying agreements and Government and Government Guaranteed securities where the country has been
recently downgraded by an international rating agency. Issuing institution has good financial strength and
reputation.
Acceptable:
Corporate securities that are current and being serviced in accordance with the terms and conditions of the
underlying agreements. Issuing company has fair financial strength and reputation.
Sub-standard: These securities are either greater than 90 days in arrears, display indicators of impairment, or have been restructured
during the financial year.
The table below illustrates the credit quality of debt security investments as at September 30:
Superior
Desirable
Acceptable
Sub-standard
Total
Financial investments
Available-for-sale
2014
5,530,809
1,801,968
707,033
163,460
8,203,270
2013
4,565,117
2,947,081
260,604
24,285
7,797,087
