41. FINANCIAL RISK MANAGEMENT (CONTINUED) (b) Credit risk (continued) Maximum exposure to credit risk (continued) (b) Financing, advances and others (continued) Business and retail (continued) The Group and the Bank routinely update the valuation of collateral held against all financing as it adopts an annual internal valuation policy and a 2 years external valuation policy. At 31 December 2023, the gross exposure of credit-impaired financing and advances to business customers amounted to RM230,980,000 (2022: RM464,334,000) and the forced sales value of collateral held against those financing and advances amounted to RM443,082,000 (2022: RM526,060,000). House financing The following table presents credit exposures from financing and advances that are credit impaired by ranges of financing-to-value (“FTV”) ratio. FTV is calculated as the ratio of the gross amount of the financing, or the amount committed for financing commitments – to the value of the collateral. FTV ratio Group and Bank 2023 RM’000 2022 RM’000 Credit-impaired financing Less than 51% 9,956 25,773 51-70% 12,473 17,930 More than 70% 228,230 186,682 Total 250,659 230,385 (c) Financial guarantee contracts (“FGC”) FGCs mainly comprise guarantees to customers, standby or documentary letters of credit and performance related contingencies. The Group and the Bank will typically have recourse to specific assets pledged as collateral in the event of a default by a party for which the Group and the Bank have guaranteed its obligations to a third party. (d) Financing commitments Financing commitments mainly comprise irrevocable financing commitments to finance a customer provided there is no breach of any condition established in the contract. If such financing commitments are drawn down by the customer there will typically be specific collateral requirements that will need to be satisfied by the customer in order to access to credit facilities. 356 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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