Our principal risks The Group is exposed to a variety of continually changing risks that have the potential to affect our business and financial condition. Risk description Key controls and risk mitigation Credit risk is the risk of financial loss if a customer or counterparty fails to meet a contractual obligation. The risk arises principally from direct lending via our various core products such as consumer finance, leasing, factoring and credit card activities. Our proactive risk management and effective control of our credit portfolio have allowed us to reduce the risk profile in this uncertain environment. The NPL ratio continued to improve in 2023. Key developments Refer to page 70 for details on key developments. • Credit risk policies, standards, prudential limits, including credit risk indicators. • Regular independent monitoring and reporting of credit quality, concentration, arrears, Policy exceptions and breaches by the Risk Management team. • Monitoring of performance of the credit scorecards and Policy rules in credit decisioning tools. • The Debtors Monitoring Committee and the Risk Analytics Forum regularly meet to review exposures and early warning signs, and recommend appropriate treatment strategies. • Helping impaired customers or those at risk of becoming so by providing support measures where appropriate and working closely with them. • Risk-based approach to credit decision-making, with higher risk applications or complex applications being referred to a higher credit approval authority. • Appropriate pricing for the risks. • Taking collaterals where appropriate. • Review of IFRS 9 ECL models, system, policies, processes and controls. • Incorporating stress testing when assessing provisioning adequacy. Credit risk Increased Decreased Unchanged 63 OUR YEAR AT A GLANCE OUR PEOPLE GOVERNANCE FINANCIAL STATEMENTS
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