Non-PRO English to Arabic Bus/Financial Finance (general)

The forward-looking scenario component is designed to capture the not-linear nature of the relationship between macroeconomic variables and measurement of the expected credit loss, via analyses of the forecasting uncertainty of the variables used to generate the most-likely scenario. This component is based on the same methodological framework used for Performing loans (see paragraphs 1.3.2 and 1.4), but prudentially ignores the best-case scenario, considering only the average adverse and Most-likely scenarios over the next three years.
The forward-looking component affects LGD estimates by means of two impacts which are measured separately and then added together:
• Most-likely scenario with respect to the Through the cycle scenario;
• Adverse scenario with respect to the Most-likely scenario.
Application of these shocks thus determines:
Add-on most likely = LGD most most likely -LGD TTC