MCCU Annual Report - page 80

80
31. Financial Instruments and Financial Instruments Risk Management (cont'd):
a) Credit Risk- (Cont'd)
Exposure to credit risk
2013
2012
$
$
Loans to members (net)
1,790,208,729 1,571,436,133
Liquid assets - earning
783,590,567
634,247,938
Financial investments
585,726,681
644,501,939
Liquid assets - non-earning
60,452,717
43,178,833
Non earning assets - other
26,973,266
37,489,373
3,246,951,960 2,930,854,216
i)
Loans to members and guarantees
Collateral
Credit Review Process
The credit review process establishes loan policy and loan interest rates that manage risk and provide the best
possible rate based on the
member’s
credit worthiness at the time of the loan; protects saver interests by
managing risk; provides competitive interest rates and prompt service to borrowers; complies with all applicable
laws and regulations.
NOTES TO THE FINANCIAL STATEMENTS - (CONT'D)
Risk Based Lending provides different rates for different borrowers based on their financial circumstances and
credit history. Members applying for loans are evaluated against a pre-determined set of factors in determining
and assigning their appropriate risk category.
The Credit Union holds collateral against loans to members in the form of mortgage interests over property, lien
over motor vehicles, other registered charges over assets, hypothecation of shares held in the Credit Union and
guarantees. Estimates of fair values are based on the values of collateral assessed at the time of borrowing and
are generally not updated until a loan is individually assessed as impaired.
YEAR ENDED 31ST DECEMBER 2013
The Board of Directors is responsible for formulating the Credit Union's credit policies, establishing the
authorisation structure for the approval of credit facilities, limiting concentration of exposure to counterparties
and developing and maintaining the Credit
Union’s
risk ratings. The management of credit risk in respect of
loans to members and guarantees is delegated to the Credit Committee. The Credit Committee has oversight
responsibility for the Credit
Union’s
credit risk management process, including reviewing and assessing credit
risk. There is a documented credit policy in place which guides the Credit Union’s credit review process.
The carrying amount of financial assets represents the maximum exposure to credit risks before collaterals held. At
the date of the statement of financial position, these amounts were:
MANCHESTER CO-OPERATIVE CREDIT UNION (1977) LIMITED
MANCHESTER CO-OPERATIVE CREDIT UNION
ANNUAL REPORT 2013
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