Strategic Report Strategic Report Strategic Report Financial Additional Overview Strategy Performance Governance Statements Information 27. Risk Management continued Credit risk continued For retail and micro loans, the Group uses external ratings provided by Credit Bureau. The Group’s treasury, trading and interbank relationships and counterparties comprise financial services institutions, banks and broker-dealers. For these, where external ratings provided by rating agencies are available the Group credit risk department uses such external ratings. For those where external ratings are not available internal ratings are assigned. The table below shows internal and external grades used in ECL calculating. External Rating Internal Rating Credit bureau Internal Rating Description* Grade rating Moody’s S&P High grade Aaa 2 A AAA Aa1 2- B AA+ Aa2 3+ C1 AA Aa3 3 C2 AA- A1 3- C3 A+ A2 4+ A A3 4 A- Baa1 4- BBB+ Baa2 5+ BBB Baa3 5 BBB- Standard grade Ba1 5- D1 BB+ Ba2 6+ D2 BB Ba3 6 BB- B1 6- B+ B2 7+ B Low grade B3 7 D3 B- Caa1 7- E1 CCC+ Caa2 7- E2 CCC Caa3 7- E3 CCC- Ca 7- CC C *Grades are not supposed to be linked to each other across the rating categories above. Annual Report 2018Bank of Georgia Group PLC 257