Page 45 - 2021 ANNUAL REPORT draft

• When there is evidence of a significant reduction in credit risk for a financial instrument in stage
2, a probationary year of 90 days will be applied to confirm if the risk of default on such financial
instrument has decreased sufficiently before upgrading such exposure to stage 1.

• When there is evidence that a financial asset in stage 3 (other than originated or purchased credit
impaired financial asset) is no longer credit impaired and also that there is a significant reduction
in credit risk for a financial instrument in stage 3, a probationary year of 90 days will be applied
to confirm if the risk of default on such financial instrument has decreased sufficiently before
upgrading such exposure to stage 2.

• When there is evidence that a financial asset in stage 3 (other than originated or purchased credit
impaired financial asset) is no longer credit impaired and also that there is a significant reduction
in credit risk for a financial instrument in stage 3, a probationary year of 180 days will be applied
to confirm if the risk of default on such financial instrument has decreased sufficiently before
upgrading such exposure to stage 1.

The regulator noted that the essence of the waiting year is to confirm that the risk of default has decreased
sufficiently before upgrading the financial asset to a lower stage

Governance

The Bank’s Board of Directors and Senior Management are responsible for ensuring that the bank has
appropriate credit risk management practices, including an effective system of internal control, to determine
adequate expected credit loss (ECL) allowances in accordance with IFRS 9 as well as the Bank’s stated
policies and relevant supervisory guidance.

Guaranty Trust Bank has instituted an effective governance and control framework around the IFRS 9
processes to ensure: that data integrity and availability is upheld, expert judgement is adopted in the design
of the ECL models and finally the IFRS 9 processes are automated to give all stakeholders confidence in
the resulting financial information.

The Bank’s Core Banking Application (BANKS) and the Credit Risk Management rating system are the key
pillars of the IFRS 9 model. For the purpose of estimating expected credit loss as prescribed by the
standard, the Bank has designed an ECL framework that generates data from the banking system which is
processed by the Credit Risk Management and Financial Control Unit and transformed into IFRS 9
compliant figures.

In order to maintain a strong internal control around the IFRS 9 system, the table below details the entire
process regarding the IFRS 9 process and the various responsibilities.
S/N Stakeholders Task Responsibilities

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Guaranty Trust Bank (Gambia) Limited Financial Statements December 2021