Credit Union Annual Report 2022 - Flipbook - Page 77
THE CAYMAN ISLANDS CIVIL SERVICE ASSOCIATION (CICSA)
CO-OPERATIVE CREDIT UNION LIMITED
NOTES TO FINANCIAL STATEMENTS (continued)
July 31, 2022
22. Financial risk management (continued)
All Committee members are elected at the AGM of the Credit Union, where the supreme authority of the Credit Union
is vested in the General Meeting of members at which every member has a right to attend and vote on all issues. All
Board and Committee members come from a wide range of highly experienced positions within the Government,
Statutory bodies and the private sector .
ii.
Credit risk
Financial assets that potentially expose the Credit Union to credit risk consist principally of cash at ba nk, fixed
deposits, and loans.
The extent to which the Credit Union is exposed to credit risk in respect of these financial assets approximates their
carrying value as reflected in the Statement of Financial Position.
Cash at bank and fixed deposits
The Credit Union seeks to mitigate its credit risk by placing its cash at banks and fixed deposits with reputable
financial institutions. At July 31, 2022, all of the cash at bank and fixed deposits are placed with two unrated
financial institutions, being Cayman National Bank and Butterfield Bank (Cayman) Limited and one rated bank CIBC
First Caribbean Bank Limited. All Banks hold Class A banking licenses, which in the opinion of management, are
stable financial institutions and in addition are regulated b y the Cayman Islands Monetary Authority.
Loans to members
All of the Credit Union’s business activity is with its members, who are employees or former employees, or relations
thereof, of the Government of the Cayman Islands and Statutory Authorities/Boards or Utility Companies operating in
the Cayman Islands, which gives rise to a concentration of risk in respect of geographical area, as both members and
assets pledged as security are based exclusively in the Cayman Islands.
All members are eligible for loans provided they meet the conditions specified in the Rules and the Credit Policy.
However, to meet the interest of individual members as well as that of total membership as a whole, the ability to
repay, type of security offered and the availability of funds (management of liquidity risk) assume paramount
significance.
The management of credit risk in respect of loans to members is executed by the management of the Credit Union. All
significant loan applications and credit terms are reviewed and authorised respectively by the Internal Credit Committee
and the Credit Committee. The Credit Union follows lending policies and guidelines approved by the Board of
Directors, as set out in the Credit Policy, which guides the Credit Union’s credit process. The amount of other collateral
obtained is based on the Credit Committee’s credit evaluation of the member.
The Credit Union does not make use of an automated credit scoring or rating system. It is the Credit Union ’s policy to
extend borrowing facilities to members that are within the member’s capacity to repay and not to rely exclusively on
security pledged or offered.
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