Credit Risk Overview 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. CFSL’s overall credit book witnessed a year-on-year growth of 17.6%. Total credit exposure increased to MUR 20.5 billion as of 30 September 2023, from MUR 17.4 billion (September 2022), with growth reflected primarily in the consumer finance portfolio. Sustainable growth in the consumer finance portfolio is expected in 2023/2024. The portfolio concentration remains consistent with the Group’s risk appetite and risk/return expectations. Positive trends in credit quality of the credit portfolio. Modest ECL increase of 3.2% as at end of September 2023 as compared to September 2022, mainly due to portfolio growth in the consumer finance portfolio which grew by 11.4%. The IFRS 9 ECL models have been updated with no major impact on the total reported ECL. NPL ratio net of provisioning remains under 5%. Ensuring sufficient provisions: NPL coverage ratio was at 58.7% at end of September 2023. 12.5% growth Key highlights Other risk types In addition to the above material risks, managing the Strategic Risk is another major component of CFSL’s Risk Management framework. Strategic risk is the risk of inadequate returns over the long-term. It includes the failure to develop an effective and sustainable long-term strategy, the inadequate execution of a chosen strategy, or failure to adapt a chosen strategy where fundamental assumptions underpinning the strategy have changed. Strategic risks for CFSL arise mostly from the exposure to the macroeconomic environment, changes in the competitive landscape, regulatory and technological developments. It also implicitly includes elements of non-standard risks such as reputational risk. CFSL’s Risk Management framework provides the mechanism for the Board and Management to consider such matters. MUR 69 OUR YEAR AT A GLANCE OUR PEOPLE GOVERNANCE FINANCIAL STATEMENTS
RkJQdWJsaXNoZXIy MzQ3MjQ5