CAPITA FINANCIAL SERVICES INC. (ST. LUCIA BRANCH) Notes to the Financial Statements March 31, 2024 (expressed in Eastern Caribbean dollars) 25 5 Loans and Advances …continued In November 2015, the Branch’s Head Office entered into a Deed of Sale and Administration agreement with the Barbados Public Workers’ Co-operative Credit Union Limited (BPWCCUL), its ultimate parent, for the acquisition of a portfolio of real estate loans amounting to $26,864,082 starting the fiscal year 2016-2017. The Head Office concurrently entered into an Intra Company Loan Allocation and Administrative agreement, allocating a portion of those loans to the Branch applied in three tranches totalling $10,702,900. Management determined that substantially all the risks and rewards of the said loan portfolio have been transferred to the Branch. In September 2021 the ultimate parent BPWCCUL repurchased a portion loans in the sum of $1,907,893, and in February 2023 repurchased the remaining loans totaling $4,921,510. The Head Office retained the funds from the repurchase of those facilities and replaced those loans with Capita Barbados land loans in two tranches of $2,144,541 and $4,001,096 under a revised Intra Company Loan Allocation and Administration agreement. The remaining amount of $683,766 owed to the Branch after the replacement of the loans, was applied to reduce the balance owed to Head Office. The sum of $5,408,042 (2023 - $5,770,852) representing the balance after loan repayment is included on the statement of financial position of the Branch at year end. The movement in the expected credit loss allowance is as follows: 2024 Consumer $ Business $ Mortgages $ Total $ Balance, beginning of year 542,106 35,841 106,299 684,246 Amounts charged/written off (326,057) – – (326,057) Expected credit loss (note 18) 103,399 28,357 119,132 250,888 Balance, end of year 319,448 64,198 225,431 609,077 2023 Consumer $ Business $ Mortgages $ Total $ Balance, beginning of year 588,549 – 109,241 697,790 Amounts charged/written off – – – – Expected credit loss (note 18) (46,443) 35,841 (2,942) (13,544) Balance, end of year 542,106 35,841 106,299 684,246 The effective rate of interest on mortgages and land loans varies between 4.0% and 10.0% (2023 - 4.0% and 10.0%) per annum, the rate on business loans varies between 5.0% to 9.5% (2023 -5.0% to 9.0%) whilst the rates on consumer loans vary between 6.0% and 13.0% (2023 - 6.0% and 13.0%) per annum. The term of mortgage loans does not exceed 30 years.
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