Republic Bank Limited
118
For the year ended September 30, 2015. Expressed in thousands of Trinidad and Tobago dollars ($’000) except where otherwise stated
Notes to theConsolidatedFinancial Statements
4
Financial
21 RISK MANAGEMENT
(continued)
21.2 Credit risk
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The Group uses a risk rating system which groups commercial/corporate accounts into various risk categories to facilitate the
management of risk on both an individual account and portfolio basis. For retail lending, a computerised Credit Scoring system
with preset risk management criteria is in place at all branches to facilitate decision-making. Trend indicators are also used to
evaluate risk as improving, static or deteriorating. The evaluation of the risk and trend inform the credit decision and determines
the intensity of the monitoring process.
The Group’s credit control processes emphasise early detection of deterioration and prompt implementation of remedial action
and where it is considered that recovery of the outstanding balance may be doubtful or unduly delayed, such accounts are
transferred from performing to non-performing status.
Loan loss provisions are set aside to cover any potential loss in respect of debts that are not performing satisfactorily. A review
of these provisions is conducted quarterly in accordance with established guidelines and recommended provisions arising out
of this review are submitted to the Board for approval. Non-performing debts recommended for write-off are also reviewed
annually and action taken in accordance with prescribed guidelines.
The Group avoids exposure to undue concentrations of risk by placing limits on the amount of risk accepted from a number of
borrowers engaged in similar business activities, or activities in the same geographic region or with similar economic features
that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other
conditions. Such risks are controlled and monitored on a revolving basis and are subject to an annual or more frequent review.
Limits on the level of credit risk by product, industry sector, client and geography are approved by the Board of Directors.
