2. SUMMARY OF MATERIAL ACCOUNTING POLICIES (CONTINUED) 2.10 Impairment (continued) Impairment of financial assets (continued) (i) Impairment of financial assets (continued) General approach/three stage approach Under collective assessment, the Group and the Bank apply a three-stage approach to measuring ECL on financial assets measured at amortised cost and FVOCI. Financial assets migrate through the following three stages based on the change in credit quality since initial recognition: i) Stage 1: 12-months ECL (“Stage 1”) For exposures where there has not been a significant increase in credit risk since initial recognition and that are not credit impaired upon recognition, the portion of lifetime ECL associated with the probability of default events occurring within the next 12 months is recognised. ii) Stage 2: Lifetime ECL – not credit impaired (“Stage 2”) For exposures where there has been a significant increase in credit risk since initial recognition but that are not credit impaired, a lifetime ECL is recognised. iii) Stage 3: Lifetime ECL – credit impaired (“Stage 3”) Financial assets are assessed as credit impaired when one or more events that have a negative impact on the estimated future cash flows of that asset have occurred. For financial assets that have become credit impaired, a lifetime ECL is recognised. Financial instruments that are credit-impaired with exposure more than RM1 million are assessed on individual basis. The Group and the Bank define a financial instruments that has objective evidence of impairment as default, when it meets one or more of the following criteria; Quantitative criteria; (i) Principal or profit of both is past due for more than 90 days/MIA 3 (ii) Cross default Qualitative criteria; A financing is credit impaired when one or more triggers/criteria that have a detrimental impact on the estimated future cash flow of the financial asset have occurred. The Group and the Bank consider the following obligatory triggers; (i) Ceased operation (ii) Bankruptcy/wound up (iii) Fraud with investigation report duly confirmed as fraud (iv) Liquidator/R&M appointed (v) Deceased (vi) Practice Note 17 (“PN17”) classification by Bursa Malaysia and a loss of repayment capability 291 1 2 3 4 5 6 7 8 9 www.bankislam.com FINANCIAL STATEMENTS
RkJQdWJsaXNoZXIy NDgzMzc=