CAPITA FINANCIAL SERVICES INC. (ST. LUCIA BRANCH) Notes to the Financial Statements March 31, 2024 (expressed in Eastern Caribbean dollars) 21 3 Critical Accounting Estimates and Judgments …continued a) Expected credit losses (ECL) …continued The Branch formulated three economic scenarios: a base case, which is the central scenario, developed internally based on consensus forecasts, and two less likely scenarios, one upside and one downside scenario. The central scenario is aligned with information used by the Branch for other purposes such as strategic planning and budgeting. External information considered includes economic data and forecasts published by governmental bodies and monetary authorities in the region where the Branch operates, international organisations such as the International Monetary Fund and selected private-sector forecasts. The scenario probability weightings applied in measuring ECL are as follows: 2024 March 31 Upside Central Downside Scenario probability weighting 20% 50% 30% 2023 March 31 Upside Central Downside Scenario probability weighting 20% 50% 30% GDP growth rates, inflation rates and price indices. Forward looking macro-economic information and assumptions have been considered in these scenarios when forecasting both 12-month and lifetime expected credit losses. Periodically, the Branch carries out stress testing of more extreme shocks to calibrate its determination of the upside and downside representative scenarios.
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