Page 73 - 2021 ANNUAL REPORT draft

• Establishing the authorization structure for the approval and renewal of credit facilities.
Authorization limits are allocated to business unit heads. Larger facilities require approval by the
Management Credit Committee, Executive Director, Managing Director and the Board Credit
Committee/Board of Directors as appropriate.
• Reviewing and assessing credit risk - Management Credit Committee assesses all credit exposures
in excess of designated limits, prior to facilities being committed to customers by the business unit
concerned. Renewals and reviews of facilities are subject to the same review process.
• Developing and maintaining the Bank’s risk grading in order to categorize exposures according to
the degree of risk of financial loss faced and to focus management on the attendant risks. The
current risk grading framework consists of ten grades reflecting varying degrees of risk of default
and the availability of collateral or other credit risk mitigation. The responsibility for approving the
risk grades lies with the Board Credit Committee. The risk grades are subject to regular review by
the Risk Management Unit.

Reviewing compliance of business units with agreed exposure limits, including those for selected industries,
country risk and product types. Regular reports are provided to Risk Management Unit on the credit quality
of local portfolios and appropriate corrective action is taken.
Providing advice, guidance and specialist skills to business units to promote best practice throughout the
Bank in the management of credit risk.
There were no changes in the Bank’s risk management policies. Each business unit is required to
implement Bank credit policies and procedures, with credit approval authorized by the Board Credit
Committee.

Credit Risk Measurement

In line with IFRS 9, the bank adopted the expected credit loss (ECL) approach. The (ECL) model should
reflect the general pattern of deterioration in the credit quality of financial instruments over the life of the
instruments. In estimating the expected credit quality of the instrument, the Bank considers reasonable and
supportable information available without undue cost or effort at the reporting date, past events, current
conditions and forecasts of future economic conditions.
Guaranty Trust Bank (Gambia) Limited undertakes lending activities after careful analysis of the borrowers’
character, capacity to repay, cash flow, credit history, industry and other factors. The Bank acknowledges
that there are diverse intrinsic risks inherent in its different business segments and, as a result, applies
different parameters to adequately dimension the risks in each business segment.
The Bank’s rating grades reflect the range of parameters developed to predict the default probabilities of
each rating class in line with international best practices and in compliance with BASEL II requirements.
The grades reflect granularities and are handled by Account Officers and Relationship Managers with
further check by Credit Risk Analysis Unit in Credit Risk Management Unit.

Rating
Grade Description Characteristics
1 (AAA) Exceptional • Exceptional credit quality
Credit • Obligors with overwhelming capacity to meet obligation
• Top multinationals/corporations
• Good track record
• Strong brand name
• Strong equity and assets
• Strong cash flows
• Full cash coverage

73 | P a g e
Guaranty Trust Bank (Gambia) Limited Financial Statements December 2021