Page 172 - Capricorn IAR 2020

GLOSSARY OF TERMS ANNUAL FINANCIAL GLOSSARY OF TERMS STATEMENTS
NOTES TO THE CONSOLIDATED AND SEPARATE ANNUAL FINANCIAL STATEMENTS (continued)
for the year ended 30 June 2020
3. FINANCIAL RISK MANAGEMENT (continued)
3.2 Credit risk (continued)
3.2.6 Credit quality of loans and advances and other financial instruments (continued) (i) Credit quality and management of loans and advances (continued)
Subsequent credit assessments
Management information system reports were developed over time in order to effectively monitor and manage the quality of the loan portfolio and pro-actively identify problem accounts and trends. The following reports are generated:
• Excesses are reported on a daily basis and reviewed annually.
• The branches submit a monthly report on specific issues in order to take remedial actions on dormant accounts, suspended
accounts, irregular accounts (outstanding 30 days and longer), outstanding security, special mention accounts, guarantees, letters of credit and foreign exchange contracts, floor plans, savings accounts in overdraft and bad debts written off within branch mandates.
• The credit department submits a monthly report to the executive management team and a more detailed report to the board of directors on a quarterly basis regarding the status of the credit portfolio of the Group.
• Monthly statistics per product are used to monitor the quality and management of the loan portfolio per branch.
• All clients with exposures approved above branch level are interviewed by credit before non-performing accounts are transferred
to the legal collections branch.
• All transfers to the legal collections branch with a material impairment are scrutinised by the credit department and categorised
under:
− Poor assessment
− Poor management
− Poor collateral management − Economic reasons
− Other
The banks have a process to proactively manage potential problem accounts to prevent possible losses. These advances are identified with assistance of the branches and are part of monthly credit reporting processes. Impairments on these active accounts are raised in accordance with regulatory requirements under the special mention category.
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