Page 108 - 86395_CCB - 2024 Annual Report (web)

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– Where the underlying collateral of a loan
has been sold, with the proceeds having
been received by the Bank, and there is no
reasonable expectation of recovering the
remainder of the outstanding balance due;
– The write off has been approved in line with
the Bank’s policy; and
– The Bank have explored reasonable avenues
of recovering the outstanding loan amount.

The release of provisions and the write‑off
of any bad debt is subject to appropriate
delegated authorities.
Credit risk grades
The Bank allocates each exposure a credit risk
grade (slot) using its Credit Grading Model.
Each exposure has been allocated a credit risk
grade on initial recognition. Credit grades are
formally reviewed as a minimum on an annual
basis. The grades are reassessed earlier if the
customer falls into arrears or contacts the Bank
with information that impacts its credit quality.
The table below presents the Bank’s loan
portfolio split by slot. Each loan account is
allocated a slot between 1 and 4, with accounts
in default allocated a slot 5

Stage 1 Stage 2 Stage 3
Lending split by slot as at 31 December 2024 (£’000) (£’000) (£’000) Total
1 – 2 677,839 1,352 – 679,191
3 195,340 33,686 – 229,026

4 8,017 119,649 – 127,666
5 – – 28,082 28,082
Real Estate Gross loans ** 881,196 154,687 28,082 1,063,965

Asset Finance Gross loans * 159,999 3,962 449 164,410
* Excludes effective interest rate
** Excludes fair value hedge adjustment

The majority of slot 1 to 3 accounts relate to Default (PD) at origination which is reviewed
performing loans where the loans are fully up monthly. The PD is calculated using the Moody’s
to date and no significant change in Credit Risk Risk Calc system. The exposures are allocated a IFRS
has been identified. 9 stage depending on the status of the account and
the PD. Accounts which have triggered the Bank’s
The majority of slot 4 loans are in stage 2 SICR (Significant Change In Credit Risk) criteria or
as a result of accounts falling into arrears or are over 30 days in arrears are as a minimum in
other deteriorating credit factors having been
stage 2. Accounts over 90 days in arrears or are
identified, and the account placed on the
Bank’s Credit watch‑list. considered unlikely to pay are classified in stage 3.
Provisioning stages
All slot 5 customers are in stage 3 with the
majority categorised as being in default as a Under IFRS 9 all the Bank’s lending exposures are
result of arrears in excess of 90 days. allocated a stage based on the status of the loan.
The Bank has set the following definitions for each
The Bank’s Asset Finance and CV&S portfolio
exposures are allocated a Probability of of the three stages within IFRS 9: