Impairment & Provisioning Policy¶
| Code | CRE-006 |
| Domain | Credit Risk |
| Owner | Chief Financial Officer |
| Status | Draft |
| Applicability | Platform |
| Jurisdiction | NZ + AU |
| Business domain | BD05 |
| Review date | 2027-03-25 |
Regulations: IFRS 9¶
Purpose¶
Govern the identification, measurement, and reporting of credit impairment and expected credit loss (ECL) provisions under IFRS 9. Establishes the stage allocation framework, ECL model governance, provision posting process, and Board oversight requirements for impairment.
Scope¶
All financial assets measured at amortised cost or fair value through other comprehensive income that are subject to IFRS 9 impairment requirements. Covers the full loan portfolio including retail loans, credit cards, and any wholesale credit exposures.
Policy statements¶
Loan impairment provisions SHALL be calculated under the IFRS 9 Expected Credit Loss (ECL) framework at each statutory reporting date. Provisions SHALL reflect the expected loss over the relevant measurement horizon: 12-month ECL for Stage 1, lifetime ECL for Stages 2 and 3.
Stage allocation — Stage 1 (performing), Stage 2 (significant increase in credit risk), Stage 3 (credit-impaired) — SHALL be determined by the automated stage allocation model (MOD-030) using the staging criteria approved by the CRO and the Board Audit & Risk Committee.
Manual stage override — moving an asset from the model-determined stage — SHALL require dual approval by the Head of Credit Risk and CFO, with documented rationale. All manual overrides SHALL be reported to the Board Audit & Risk Committee at its next meeting.
ECL calculations SHALL be performed by the governed ECL model (MOD-031) applied to ledger balances at the reporting date. Manual provision calculations that are not derived from MOD-031 are prohibited except for individually assessed large exposures approved by the CRO.
Forward-looking macroeconomic scenarios used in the collective ECL calculation — including probability-weighted base, upside, and downside scenarios — SHALL be approved by the CRO at each reporting date.
Provision entries in the general ledger SHALL be generated automatically from MOD-031 through MOD-001. Manual provision journals outside this process require dual approval by the CFO and independent review by Finance before posting.
The ECL model SHALL be subject to independent validation at least annually per DT-005, including back-testing against actual loss experience and benchmarking of key modelling assumptions.
Impairment results SHALL be reviewed by the Board Audit & Risk Committee at each meeting. The review SHALL include: movement in provisions since the last reporting date, stage migration analysis, model performance metrics, and any material individually assessed provisions.
All staging records, ECL calculations, model validation reports, and Board review papers SHALL be retained for 7 years.
Satisfying modules¶
| Module | Name | Mode | Description |
|---|---|---|---|
| MOD-005 | Daily accrual calculator | AUTO |
Effective interest rate method applied consistently across all loan accounts |
| MOD-030 | Stage allocation model | AUTO |
Staging criteria applied consistently to all loans — no subjective stage assignment |
| MOD-031 | ECL calculation & GL posting | CALC |
ECL calculated at loan level daily — no quarterly manual assessment |
| MOD-065 | Credit servicing & collections | AUTO |
Tracks loan stage transitions (current → arrears → default) and triggers the impairment events that feed the ECL engine. |
| MOD-167 | Credit card facility engine | CALC |
Credit card asset class contributes to IFRS 9 ECL calculations — revolving balance is the EAD; product-type LGD and PD are applied by MOD-031 once MOD-167 feeds the credit.loan_accounts table. |
Part of Credit Risk · Governance overview
Compiled 2026-05-22 from source/entities/policies/CRE-006.yaml