Page 59 - GTBank Annual Report 2020 eBook

• Good character of owner
• Typically good companies in cyclical industries
• Satisfactory asset quality and liquidity
• Good debt capacity but smaller margins of debt service
coverage
• Reasonable management in key areas
5 (BB) Average
• Temporary difficulties can be overcome to meet debt
obligations
• Good management but depth may be an issue
• Satisfactory character of owner
• Typically good companies in cyclical industries
• Limited debt capacity and modest debt service coverage
• Could be currently performing but susceptible to poor
Acceptable industry conditions and operational difficulties
6 (B)
Risk • Declining collateral quality
• Management and owners are good or passable
• Typically borrowers in declining markets or with small
market share and operating in cyclical industries
• Eliciting signs of deterioration as a result of well-defined
weaknesses that may impair repayment
• Typically start-ups/declining markets/deteriorating
7 (CCC) Watch-list industries with high industry risk
• Financial fundamentals below average
• Weak management
• Poor information disclosure
• Well-defined weaknesses though significant loss unlikely;
orderly liquidation of debt under threat
Substandard • Continued strength is on collateral or residual repayment
8 (CC)
Risk capacity of obligor
• Partial losses of principal and interest possible if
weaknesses are not promptly rectified
• Questionable management skills
• High probability of partial loss
• Very weak credit fundamentals which make full debt
repayment in serious doubt
9 (C) Doubtful Risk
• Factors exist that may mitigate the potential loss but awaiting
appropriate time to determine final status
• Demonstrable management weaknesses, poor
repayment weaknesses and poor repayment profile
• A definite loss of principal and interest
• Lack of capacity to repay unsecured debt
10 (D) Lost
• Bleak economic prospects
• Though it is still possible to recover sometime in the
future, it is imprudent to defer write – offs
Annual Report 2020

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