Company: BCS
Filing Date: 2025-02-13
Form Type: 20-F
Source: 0000312069-25-000114
Chunk: 547

Company: BARCLAYS PLC
Filing Date: 2025-02-13
Form: 20-F
Chunk 547
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 of the original loan, except in circumstances where debt is exchanged for equity. Both performing and non-performing forbearance assets are classified as Stage 3 except where it is established that the concession granted has not resulted in diminished financial obligation and that no other regulatory definition of default criteria have been triggered, in which case the asset is classified as Stage 2 . The minimum probationary period for non-performing forbearance is 12 months and for performing forbearance, 24 months . Hence, a minimum of 36 months is required for non-performing forbearance to move out of a forborne state. No financial instrument in forbearance can transfer back to Stage 1 until all of the Stage 2 thresholds are no longer met and can only move out of Stage 3 when no longer credit impaired. Critical accounting estimates and judgements IFRS 9 impairment involves several important areas of judgement, including estimating forward-looking modelled parameters (PD, LGD and EAD), developing a range of unbiased future economic scenarios, estimating expected lives and assessing significant increases in credit risk, based on the Group’s experience of managing credit risk. The determination of expected life is most material for Barclays' credit card portfolios which is obtained via behavioural life analysis to materially capture the risk of these facilities.

Within the retail and small businesses portfolios, which comprise large numbers of smal l homogeneous assets with similar risk characteristics

where credit scoring techniques are generally used, the impairment allowance is calculated using forward-looking modelled parameters which

are typically run at account level. There are many models in use, each tailored to a product, line of business or customer category. Judgement

and knowledge is needed in selecting the statistical methods to use when the models are developed or revised. Management adjustments to

impairment models, which contain an element of subjectivity, are applied in order to factor in certain conditions or changes in policy that are not

fully incorporated into the impairment models, or to reflect additional facts and circumstances at the period end. Management adjustments are

reviewed and incorporated into future model development where appropriate.

For individually significant assets in Stage 3 , impairment allowances are calculated on an individual basis and all relevant considerations that have

a bearing on the expected future cash flows across a range of economic scenarios are taken into account. These considerations can be

particularly subjective and can include the business prospects for the customer, the realisable value of collateral, the Group’s position relative to

other claimants, the reliability of customer information and the likely cost and duration