JPS & Partners 2017 Annual Report

Notes to the Financial Statements
For the year ended 31st December 2017
(Expressed in Jamaican Dollars unless otherwise indicated)
4. Financial Instruments & Financial Instruments Risk Management (cont'd):
(a) Credit Risk (cont'd)
i) Loans to Members & Guarantees (cont'd)
Impaired Loans
Impaired loans are loans for which the Credit Union determines that it is probable that it will be unable to collect
all principal and interest due according to the contractual terms of the loan.
Past Due but not Impaired Loans
These are loans where contractual interest or principal payments are past due but the Credit Union believes that
impairment is not appropriate on the basis of the level of security available or the stage of collection of amounts
owed to the Credit Union.
Loans with Re-Negotiated Terms
Loans with renegotiated terms are loans that have been restructured due to deterioration in the member's
financial position and where the Credit Union has made concessions that it would not otherwise consider. Once
the loan is restructured, it remains in this category until it is fully repaid.
Allowances for Impairment
The Credit Union established an allowance for impairment losses that represents its estimate of incurred losses in
its loan portfolio. The main components of this allowance are a specific loss component that relates to
individually significant exposures, and a collective loan loss allowance established on a group basis in respect of
losses that have been incurred but have not been identified on loans subject to individual assessment for
impairment. Additional regulatory allowance is made based on the aging of the delinquency portfolio. This
additional allowance is treated as an appropriation and taken to reserves.
Write-Off Policy
The Credit Union writes off loans and any related allowances for impairment losses when it is determined that
the loans are uncollectible. This determination is usually made after considering information such as changes
in the borrower's financial position, or that proceeds from collateral will not be sufficient to pay back the entire
exposure. Additionally, loans are written off once they are delinquent for 365 days or more based on regulatory
requirements.
ii) Deposits and Investments
The Credit Union limits its exposure to credit risk by investing mainly in liquid assets. These investments are held
only with counterparties that have high credit quality and Government of Jamaica securities. The management
therefore does not expect any counterparty to fail to meet its obligations.
Pushing you Beyond All Limits!
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JPS & Partners Co-operative Credit Union