Page 55 - Ecobank Gambia Annual Report 2020

Internal credit risk ratings ¦ Extent of utilisation of granted limit;
¦ Forbearances (both requested and granted);
In order to minimise credit risk, the bank adopted the ¦ Changes in business, financial and economic
credit risk grading from the parent company- Ecobank
Transnational Incorporated which categorise exposures conditions;
according to their degree of risk of default. The Group’s ¦ Credit rating information supplied by external rating
credit risk grading framework comprises ten categories.
The credit rating information is based on a range of agencies;
data that is determined to be predictive of the risk of ¦ For retail exposures: internally generated data of
default and applying experienced credit judgement.
The nature of the exposure and type of borrower are customer behavior, affordability metrics etc.; and
taken into account in the analysis. Credit risk grades are ¦ For corporate exposures: information obtained by
defined using qualitative and quantitative factors that are
indicative of risk of default. periodic review of customer files including audited
The credit risk grades are designed and calibrated to financial statements review, market data such as
reflect the risk of default as credit risk deteriorates. As prices of credit default swaps (CDS) or quoted bonds
the credit risk increases the difference in risk of default where available, changes in the financial sector the
between grades changes. Each exposure is allocated customer operates etc.
to a credit risk grade at initial recognition, based on The Bank uses credit risk grades as a primary input into
the available information about the counterparty. All the determination of the term structure of the PD for
exposures are monitored and the credit risk grade is exposures. The Bank collects performance and default
updated to reflect current information. The monitoring information about its credit risk exposures analysed by
procedures followed are both general and tailored to the jurisdiction or region and by type of product and borrower
type of exposure. as well as by credit risk grading. The information used
The following data are typically used to monitor the is both internal and external depending on the portfolio
Bank’s exposures: assessed. The table below provides a mapping of the
¦ Payment record, including payment ratios and ageing Group’s internal credit risk grades to external ratings.

analysis;

Risk rating mapping

Bank’s credit risk grades S&P rating Fitch Moody’s Description
1
2 AAA AAA Aaa Low to fair risk
3
4 AA+ to AA AA+ to AA Aa1+Aa2 Low to fair risk
5
6 A+ to A A+ to A A1+A Low to fair risk
7
8 BBB+ to BBB BBB+ to BBB Baa1 + Baa2 Low to fair risk
9
10 BB+ to BB BB+ to BB Ba1 + Ba2 Monitoring

B+ to B B+ to B B1 + B2 Monitoring

CCC+ CCC+ Caa Monitoring

CCC CCC Caa Substandard

CC+ to CC- CC+ to CC- Ca to C Impaired

C, D C, D Ca to C Impaired

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