(Jamaica) Limited - FirstCaribbean International Bank

notes to the Financial Statements
Year Ended 31 October 2009
(Expressed in Jamaican dollars unless otherwise indicated)
35. Financial Risk Management (Continued)
(c) Geographical concentration of assets, liabilities, off-balance sheet items, revenues and capital expenditure
The Group operates in only the Jamaican geographical market.
(d) Credit rating system and credit quality per class of financial assets
Credit Quality
A mapping between the Group’s internal ratings and the ratings used by external agencies is shown in the table
below. As part of the Group’s risk-rating methodology, the risk assessed includes a review of external ratings of the
obligor. The obligor rating assessment takes into consideration the Group’s financial assessment of the obligor, the
industry, and the economic environment of the country in which the obligor operates. In certain circumstances,
where a guarantee from a third party exists, both the obligor and the guarantor will be assessed.
Quality per FCIB Standard & Poor’s equivalent Moody’s Investor Services
High grade AAA to BBB- Aaa to Baa3
Standard BB+ to B- Ba to B3
Substandard CCC+ to CC Caa1 to Ca
Impaired D C
A credit scoring methodology is used to assess personal customers and a grading model is used for Corporate clients.
As well, an ageing analysis of the portfolio assists in the development of a consistent internal-risk rating system. This
risk rating system is used for portfolio management, risk limit setting, product pricing, and in the determination of
economic capital.
The effectiveness of the risk rating system and the parameters associated with the risk ratings are monitored within
Credit Risk Management and are subject to an annual review.
The credit quality of financial assets is managed using internal credit ratings.
The table below shows the credit quality by class of asset for gross loans and advances to customers, based on our
internal credit rating system. Amounts provided are before allowance for credit losses, and after credit risk mitigation,
valuation adjustments related to the financial guarantors, and collateral on agreements.
The Group
2009
Performing
Sub
High Standard Standard
Grade description Grade Grade Grade Impaired Total
$’000 $’000 $’000 $’000 $’000
Loans and advances to customers:
Mortgages 6,882,802 29,455 579,224 314,071 7,805,552
Personal loans 4,478,222 186,339 241,347 635,049 5,540,957
Business & government loans 18,700,919 159,138 1,911,094 1,006,197 21,777,348
Total 30,061,943 374,932 2,731,665 1,955,317 35,123,857
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