41. FINANCIAL RISK MANAGEMENT (CONTINUED) (b) Credit risk (continued) Management of credit risk (continued) A detailed limit structure is in place to ensure that risks taken are within the risk appetite as set by the Board and to avoid credit risk concentration on a single customer, sector, product, Shariah contract, etc. Credit risk arising from dealing and investing activities are managed by the establishment of limits which include counterparty limits and permissible acquisition of private debt securities, subject to a specified minimum rating threshold. Furthermore, the dealing and investing activities are monitored by an independent middle office unit. Maximum exposure to credit risk The following table presents the Group’s and Bank’s maximum exposure to credit risk of on-balance sheet and offbalance sheet financial instruments, without taking into account any collateral held or other credit enhancements. For on-balance sheet assets, the exposure to credit risk equals their carrying amount. For financial guarantee contracts, the maximum exposure to credit risk is the maximum amount that the Group and the Bank would have to pay if the obligations of the instruments issued are called upon. For credit commitments, the maximum exposure to credit risk is the full amount of the undrawn credit facilities granted to customers. Note Group 2023 RM’000 2022 RM’000 Cash and short-term funds and deposits and placements with financial institutions 4,714,465 7,145,114 Financial assets at FVTPL* 1,193,970 54,868 Derivative financial assets (a) 68,412 123,000 Financial assets at FVOCI^ 12,430,426 12,017,378 Financial assets at AC 3,120,230 3,055,256 Financing, advances and others (b) 66,817,115 64,901,994 Other financial assets at AC@ 826,056 578,615 Sub-total 89,170,674 87,876,225 Credit related obligation: Financial guarantee contracts (c) 2,034,712 1,926,256 Financing commitments# (d) 10,792,547 9,201,594 Sub-total 12,827,259 11,127,850 Total credit exposures 101,997,933 99,004,075 354 Notes to the Financial Statements for the financial year ended 31 December 2023 Bank Islam Malaysia Berhad ◆ Integrated Annual Report 2023
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