Republic Bank Limited
122
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
(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 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 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 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
2015
3,160,390
4,020,141
362,464
7,542,995
2014
4,550,906
3,680,774
113,466
8,345,146
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.
