Page 72 - 2021 ANNUAL REPORT draft

(ii) additional core risks such as Reputation and Strategy risks

In addition to this, in compliance with the regulations of the Central Bank of The Gambia and also to align
with Basel II Capital Accord / best global practices, we are in the process of incorporating a strategic
framework for efficient measurement and management of the bank’s risks and capital. We have
commenced the implementation of Basel II recommended capital measurement approaches for the
estimate of the bank’s economic capital required to cope with unexpected losses. We are also putting in
place other qualitative and quantitative measures that will assist with enhancing risk management
processes and creating a platform for more risk-adjusted decision-making.

Credit risk

Lending and other financial activities form the core business of the Bank. The Bank recognizes this and has
laid great emphasis on effective management of its exposure to credit risk. The Bank defines credit risk as
the risk of counterparty’s failure to meet the terms of any lending contracts with the Bank or otherwise to
perform as agreed. Credit risk arises anytime the Bank’s funds are extended, committed, invested
or otherwise exposed through actual or implied contractual agreements.
The Bank’s specific credit risk objectives, as contained in the Credit Risk Management Framework, are:

• Maintenance of an efficient loan portfolio

• Institutionalization of sound credit culture in the Bank

• Adoption of international best practices in credit risk management

• Development of Credit Risk Management professionals.

Each business unit is required to implement credit policies and procedures in line with the credit approval
authorities granted by the Board. Each business unit is responsible for the quality and performance of its
credit portfolio and for monitoring and controlling all credit risks in its portfolio, including those subject to
Management Credit Committee’s approval
.
The Internal Audit and Credit Administration units respectively undertake regular audits of business units
and credit quality reviews.

The Bank continues to focus attention on intrinsic and concentration risks inherent in its business in order
to manage its portfolio risk. It sets portfolio concentration limits that are measured under the following
parameters: concentration limits per obligor, business lines, industry, sector, rating grade and geographical
area. Sector limits reflect the risk appetite of the Bank.

The Bank drives the credit risk management processes using appropriate technology to achieve global best
practices.

Management of Credit Risk

The Board of Directors has delegated responsibility for the management of credit risk to its Board Credit
Committee. A separate Management Credit Committee reporting to the Board Credit Committee is
responsible for oversight of the Bank’s credit risk, including:

• Formulating credit policies in consultation with business units, covering collateral requirements,
credit assessment, risk grading and reporting, documentary and legal procedures, and compliance
with regulatory and statutory requirements.

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Guaranty Trust Bank (Gambia) Limited Financial Statements December 2021