41. FINANCIAL RISK MANAGEMENT (CONTINUED) (b) Credit risk (continued) Maximum exposure to credit risk (continued) Note Bank 2023 RM’000 2022 RM’000 Cash and short-term funds and deposits and placements with financial institutions 4,678,243 7,128,159 Financial assets at FVTPL* 907,249 54,858 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@ 726,892 480,595 Sub-total 88,748,567 87,761,240 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 101,575,826 98,889,090 * Excludes unit trust ^ Excludes equity instruments @ Excludes prepayment # Excludes derivative financial instruments (a) Derivative financial assets In mitigating the counterparty credit risks from foreign exchange and derivatives transactions, the Group and the Bank enter into master agreements that provide for closeout netting with counterparties, whenever possible. A master agreement that governs all transactions between two parties, creates the greater legal certainty that the netting of outstanding obligations can be enforced upon termination of outstanding transactions if an event of default occurs. (b) Financing, advances and others Business and retail Financing, advances and others will have levels of collateralisation depending on the nature of the product. The general creditworthiness of a corporate and commercial customer tends to be the most relevant indicator of credit quality of a financing extended to it. The Group and the Bank manage its exposures to these customers by completing a credit evaluation to assess the customer’s character, industry, business model and capacity to meet their commitments in a timely manner. The Group and the Bank may take collateral in the form of a first charge over real estate, floating charges over all corporate assets and other liens and guarantees. 355 1 2 3 4 5 6 7 8 9 www.bankislam.com FINANCIAL STATEMENTS
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