Page 109 - ACCESS ANNUAL REPORT 2019

NOTES (continued)
A a o nts are in tho sands o hana edis n ess otherwise stated Financia ris anage ent contin ed
redit ris anage ent contin ed
E pected credit oss eas re ent contin ed
Definition o de a t and credit i paired assets contin ed
a itative criteria contin ed
he criteria a ove have een applied to all financial instruments held y the Group and are consistent with the definition o de ault used or internal credit ris mana ement purposes. he de ault definition has een applied consistently to model the Pro a ility o De ault PD , Exposure at De ault EAD and oss iven De ault GD throu hout the Group s expected loss calculations.
An instrument is considered to no lon er e in de ault i.e. to have cured when it no lon er meets any o the de ault criteria or a consecutive period o six months.
eas ring E E p anation o inp ts, ass ptions and esti ation techni es
he Expected Credit oss EC is measured on either a 12 month 12 or i etime asis dependin on whether a si nificant increase in credit ris has occurred since initial reco nition or whether an asset is considered to e credit impaired. Expected credit losses are the discounted product o the Pro a ility o De ault PD , Exposure at De ault EAD , and oss Given De ault GD , defined as ollows
• he PD represents the li elihood o a orrower de aultin on its financial o li ation, either over the next 12 months 12 PD , or over the remainin li etime i etime PD o the o li ation.
• EAD is ased on the amounts the Group expects to e owed at the time o de ault, over the next 12 months 12 EAD or over the remainin li etime i etime EAD .
• oss Given De ault GD represents the Group s expectation o the extent o loss on a de aulted exposure. GD varies y type o counterparty, type and seniority o claim and availa ility o collateral or other credit support. GD is expressed as a percenta e loss per unit o exposure at the time o de ault EAD . GD is calculated on a 12 month or li etime asis, where 12 month GD is the percenta e o loss expected to e made i the de ault occurs in the next 12 months and i etime GD is the percenta e o loss expected to e made i the de ault occurs over the remainin expected li etime o the loan.
he EC is determined y pro ectin the PD, GD and EAD and or each individual exposure or collective se ment. hese three components are multiplied to ether and ad usted or the li elihood o survival i.e. the exposure has not prepaid or de aulted in an earlier month . his effectively calculates an EC , which is then discounted ac to the reportin date and summed. he discount rate used in the EC calculation is the ori inal effective interest rate or an approximation thereo .
he i etime PD is developed y applyin a maturity profile to the current 12 PD. he maturity profile loo s at how de aults develop on a port olio rom the point o initial reco nition throu hout the li etime o the loans. he maturity profile is ased on historical o served data and is assumed to e the same across all assets within a port olio and credit rade and. his is supported y historical analysis.
he 12 month and li etime EADs are determined ased on the expected payment profile, which varies y product type.
orward loo in economic in ormation is also included in determinin the 12 month and li etime PD, EAD and GD. hese assumptions vary y product type. he assumptions underlyin the EC calculation such as how the maturity profile o the PDs and how collateral values chan e etc. are monitored and reviewed on a uarterly asis. here have een no si nificant chan es in estimation techni ues or si nificant assumptions made durin the reportin period.
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