Page 62 - Ecobank Gambia Annual Report 2020
P. 62
Financial Statements & Annual Report
Notes to the Financial Statements
for the year ended 31 December 2020 (in Thousands of Gambian Dalasis)
Risk limit control and mitigation policies taking of security for funds advanced, which is common
The Bank manages, limits and controls concentrations of practice. The Bank implements guidelines on the
credit risk wherever they are identified - in particular, to acceptability of specific classes of collateral or credit risk
individual counterparties and Banks and to industries. The mitigation. The principal collateral types for loans and
Bank structures the levels of credit risk it undertakes by advances are:
placing limits on the amount of risk accepted in relation ¦ Mortgages over residential properties
to one borrower, or Banks of borrowers, and to industry ¦ Charges over business assets such as premises,
segments. Such risks are monitored on a revolving basis
and subject to annual or more frequent reviews, when inventory and accounts receivables
considered necessary. Limits on the level of credit risk by ¦ Charges over financial instruments such as debt
product and industry sector are approved quarterly by the
Board of Directors. securities and equities
The exposure to any one borrower including other Longer-term finance and lending to corporate entities
financial institutions is further restricted by sub-limits are generally secured. In addition, in order to minimise
covering on and off-balance sheet exposures, and daily credit loss, the Bank seeks additional collateral from
delivery risk limits in relation to trading items such as counterparties as soon as impairment indicators are
forward foreign exchange contracts. Actual exposures identified for relevant individual loans and advances.
against limits are monitored daily. Lending limits are Collateral held as security for financial assets other
reviewed in the light of changing market and economic than loans and advances depends on the nature of the
conditions and periodic credit reviews and assessments instrument.
of probability of default. Impairment and provisioning policies
Some other specific control and mitigation measures are The Bank’s uses the Expected Credit Loss (ECL) which
outlined below: is forward looking and assess financial instruments for
Collateral impairment at the point of origination. This new standard
The Bank employs a range of policies and practices to (IFRS 9) defers significantly from the previous standard
mitigate credit risk. The most traditional of these is the (IAS 32&39) in terms of the scope, timing, basis used to
assess impairment among others.
Maximum exposure to credit risk before collateral held 2020 2019
Credit risk exposures relating to on-balance sheet assets were as follows: GMD’000 GMD’000
1,210,816 1,047,138
2,796,866 2,141,081
Balances with Central Bank of The Gambia 3,390,783 2,281,012
Investment securities: amortised cost 1,095,995 1,680,900
Loans and advances to banks
Loans and advances to customers 1,465,617 1,858,601
Credit risk exposures relating to off-balance sheet items are as follows: 8 8 ,471 77,627
Financial guarantees
Loan commitments and other credit related liabilities
60 Ecobank Gambia Annual Report 2020 www.ecobank.com
