JPS & Partners - Financial Statements 31st December2018 (4.4.19)

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JPS & PARTNERS CO-OPERATIVE CREDIT UNION LIMITED NOTES TO THE FINANCIAL STATEMENTS - CONT'D FOR THE YEAR ENDED 31ST DECEMBER 2018 (Expressed in Jamaican Dollars unless otherwise indicated) Page 23 4. Financial Instruments & Financial Instruments Risk Management (cont'd): (a) Credit Risk (cont'd) Repossessed Collateral The Credit Union obtained assets by taking possession of collateral held as security, as follows: 2018 2017 $ $ Real Estate 12,300,000 45,600,000 Motor Vehicles 3,050,000 450,000 15,350,000 46,050,000 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 Loans with Re-Negotiated Terms Allowances for Impairment Carrying Amount Repossessed properties are sold as soon as practicable with the proceeds used to reduce the outstanding indebtedness. In general, the Credit Union does not utilise the properties for business use. 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 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. Prior to January 1, 2018, the Credit Union inline with IAS 39 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 Credit Union 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. Effective January 1, 2018, the Credit Union under IFRS 9 established an impairment framework that estimates excepted credit losses in its loan portfolio. The Credit Union have a documented IFRS 9 policy in place to guide the recognition and derecognition process. Management is responsible for the reassessment of credit risk of all loans to members annually or earlier if the needs arises and determine whether there is a significant increase in the credit risk from the loan origination date to the date reporting date.
JPS & PARTNERS CO-OPERATIVE CREDIT UNION LIMITED NOTES TO THE FINANCIAL STATEMENTS - CONT'D FOR THE YEAR ENDED 31ST DECEMBER 2018 (Expressed in Jamaican Dollars unless otherwise indicated) Page 24 4. Financial Instruments & Financial Instruments Risk Management (cont'd): (a) Credit Risk (cont'd) i) Loans to Members & Guarantees (cont'd) Allowances for Impairment (cont'd) Management remedies fluctuations in the ECL through the Statement of Profit and Loss and the ECL Reserve account on a monthly basis. 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. iii) Exposure to Credit Risk 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: 2018 2017 $ $ Current Earning Liquid Assets 945,902,522 880,077,909 Loans to Members after Provision for Impairment 2,651,747,116 2,655,578,278 Held-to-Maturity Investments 434,768,226 347,310,756 Current Non-Earning Liquid Assets 30,954,679 149,561,056 Other Current Non-Earning Assets 29,013,684 40,699,889 4,092,386,227 4,073,227,888 Maximum Exposure for under IFRS 9 1) Loans As per Expected Credit Loss (ECL) Report Loans to Members before allowance for expected credit loss As per General ledger Loans to Members before allowance for expected credit loss Difference Stage 1 Stage 2 Stage 3 Total 2,461,994,684 200,965,134 33,824,015 2,696,783,833 2,696,783,833 -
Page 1 and 2: Smart decisions. Lasting value. JPS
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JPS &amp; Partners - Financial Statements 31st December2018 (4.4.19)

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JPS & Partners - Financial Statements 31st December2018 (4.4.19)