ABN 11 087 650 315 UNITY BANK LIMITED 2022 Financial Report
UNITY BANK LIMITED 2022 Financial Report
ABN 11 087 650 315
(i) CREDIT RISK – LOANS The analysis of the Bank ’s loans by class, is as follows :
2022 $'000
2021 $'000
Carrying Value Off Balance Sheet
Max Exposure
Carrying Value
Off Balance Sheet
Max Exposure
Loans to Members Mortgage
937,272 50,093 5,369 2,870 995,604
55,445
992,717 50,490 13,434 27,871
898,997 71,731 5,655 3,236 979,618 35,446 20,560
63,860
962,857 71,827 13,743 30,410
Personal Credit Cards Overdrafts
397
96
8,065 25,001
8,088 27,174
Total to Natural Persons
88,908 1,084,512
99,219 1,078,837
Corporate Borrowers Loans to Non-Members
100,711 16,659 1,112,974
18,876
119,587 16,659
4,066
39,511 20,560
-
-
Total
107,784 1,220,758 1,035,625
103,284 1,138,909
Carrying value is the value on the statement of financial position. Maximum exposure is the value on the statement of financial position plus the undrawn facilities (loans approved not advanced, redraw facilities, line of credit facilities, overdraft facilities, credit cards limits). The details are shown in Note 35 and a summary is in Note 11. All loans and facilities are within Australia. The geographic distribution is not analysed into significant areas within Australia as the exposure classes are not considered material. Concentrations are described in Note 11. The method of managing credit risk is by way of strict adherence to the credit assessment policies before the loan is approved, and by close monitoring of defaults in the repayment of loans thereafter on a daily basis. The credit policy has been endorsed by the Board to ensure that loans are only made to members or non-members that are creditworthy (capable of meeting loan repayments). The Bank has established policies over the: - Credit assessment and approval of loans and facilities covering acceptable risk assessment and security requirements - Limits of acceptable exposure over the value to individual borrowers, non-mortgage secured loans, commercial lending and concentrations to geographic and industry groups considered at high risk of default - Reassessing and review of the credit exposures on loans and facilities - Establishing appropriate provisions to recognise the impairment of loans and facilities - Debt recovery procedures; and - Review of compliance with the above policies. A regular review of compliance is conducted as part of the internal audit scope. Past due and impaired A financial asset is past due when the counterparty has failed to make a payment when contractually due. As an example, a member enters into a lending agreement with the Bank that requires interest and a portion of the principal to be paid every month. On the first day of the next month, if the agreed repayment amount has not been paid, the loan is past due. Past due does not mean that the counterparty will never pay, but it can trigger various actions such as renegotiation, enforcement of covenants, or legal proceedings. Once the past due exceeds 90 days the loans are regarded as impaired, unless other factors indicate the impairment should be recognised sooner. Daily reports monitor the loan repayments to detect delays in repayments and recovery action is undertaken after 7 days. For loans where repayments are doubtful, external consultants are engaged to conduct recovery action once the loans are over 90 days in arrears. The exposures to losses arise predominantly in the personal loans and facilities not secured by registered mortgages over real estate. If such evidence exists, the estimated recoverable amount of that asset is determined and any impairment loss, based on the net present value of future anticipated cash flows, is recognised in the income statement. In estimating these cash flows, management makes judgements about the counterparty’s financial situation and the net realisable value of any underlying collateral.
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