Page 216 - ACCESS BANK ANNUAL REPORTS_eBook

Notwithstanding who derives the risk rating, Credit Risk Bank to maintain its asset quality at a desired level.
Management is responsible for reviewing and ensuring the
correctness of the ORR and FRR assigned to a borrower In Access Bank, the objective of the Risk Rating Policy is to
and facilities. This review includes ensuring the ongoing ensure reliable and consistent Obligor Risk Ratings (‘ORRs’)
consistency of the business’ Risk Rating Process with the and Facility Risk Ratings (‘FRRs’) throughout the Bank and
Bank’s Risk Rating Policy; ongoing appropriate application to provide guidelines for risk rating for retail and non – retail
of the risk rating process and tools; review of judgmental exposures in the Bank.
and qualitative inputs into the risk rating process; ensuring
the timeliness and thoroughness of risk rating reviews; and The Risk Rating Policy incorporates credit risk rating mod-
ensuring that the documentation of the risk rating process els which estimate risk of obligor default and facility risks
is complete and current. (covering both recovery as well as exposure risk). These
models are currently based on expert judgment for retail
Credit Risk Management has the final authority if there is a and non-retail exposures. Our goal is to adopt the Internal
question about a specific rating. Rating Based (“IRB”) approach. The data required to facili-
tate the IRB approach is being gathered.

CREDIT PROCESS All Access Bank businesses that extend credit are subject
to the Risk Rating Policy.
The Bank’s credit process starts with portfolio planning and
target market identification. Within identified target mar- CREDIT RISK RATING MODELS IN ACCESS BANK PLC
kets, credits are initiated by relationship managers. The
proposed credits are subjected to review and approvals by The following are the credit risk rating models deployed by
applicable credit approval authorities. Further to appropri- the Bank.
ate approvals, loans are disbursed to beneficiaries.
On-going management of loans is undertaken by both For Retail Exposures:
relationship management teams and our Credit Risk Man-
agement Group. The process is applied at the Head Office Obligor Risk Rating (ORR) Models have been developed for:
and in the subsidiaries.
1. Personal Loans
If a preliminary analysis of a loan request by the account 2. Credit Cards
manager indicates that it merits further scrutiny, it is then 3. Auto Loans
analyzed in greater detail by the account manager, with 4. Mortgage Loans
further detailed review by Credit Risk Management. The
concurrence of Credit Risk Management must be obtained Facility Risk Rating (FRR) Models have been developed for:
for any credit extension. If the loan application passes the
detailed analysis it is then submitted to the appropriate ap- 1. Loss Given Default (LGD)
proval authority for the size and risk rating of facilities 2. Exposure at Default (EAD)

The standard credit evaluation process is based both on For Non – Retail Exposures:
quantitative figures from the Financial Statements and on
an array of qualitative factors. Factual information on the Obligor Risk Rating (ORR) Models have been developed for:
borrower is collected as well as pertinent macroeconomic
data, such as an outlook for the relevant sector. These sub- 1. Sovereign (approach to rating sovereign
jective factors are assessed by the analyst and all individuals exposures using external ratings)
involved in the credit approval process, relying not only on 2. Bank and Non-Bank Financial Institutions
quantitative factors but also on extensive knowledge of the 3. Corporate
company in question and its management. • Manufacturing Sector
• Trading Sector
• Services Sector
CREDIT RISK MEASUREMENT • Real Estate Sector
4. Small and Medium Enterprises (SME) without
Risk Rating Methodology Financials
The credit rating of the counterparty plays a fundamental
role in final credit decisions as well as in the terms offered Facility Risk Rating (FRR) Models have been developed for
for successful loan applications. Access Bank employs a ro-
bust credit rating system based on international best prac- 1. Loss Given Default (LGD)
tices (including Basel II recommendations) in the determi- 2. Exposure at Default (EAD)
nation of the Obligor and Facility risks and thus allows the

216 Access BAnk Plc
Annual Report & Accounts 2017