41. FINANCIAL RISK MANAGEMENT (CONTINUED) (b) Credit risk (continued) Credit quality of financing, advances and others (continued) No significant changes to estimation techniques or assumptions were made during the year. Internal rating definition:- Excellent to Good : Sound financial position with no difficulty in meeting its obligations. Satisfactory : A dequate safety of meeting its current obligations but more time is required to meet the entire obligation in full. Fair : Higher risks on payment obligations. Financial performance may continue to deteriorate. Classification of financing, advances and others:- • Neither past due nor impaired financing Financing for which the customer has not missed a contractual payment (profit or principal) when contractually due and is not impaired and there is no objective evidence of impairment. • Past due but not impaired financing Financing for which its contractual profit or principal payments are past due, but the Group and the Bank believe that impairment is not appropriate on the basis of the level of collateral available and/or the stage of collection amounts owed to the Group and the Bank. • Impaired financing In addition to Note 2.1(a)(ii), financing is classified as impaired/defaulted: (i) where the principal or profit or both are past due for three months or more; (ii) in the case of revolving credit facilities, where the outstanding amount has remained in excess of the approved limit for a period of three months or more; (iii) where the amount is past due or the outstanding amount has been in excess of the approved limit for three months or less and the financing exhibits indications of significant credit weakness; (iv) as soon as default occurs where the principal and/or profit repayments are schedule on intervals of 3 months or longer. Past due but not impaired financing Group and Bank 2023 2022 RM’000 % to gross financing RM’000 % to gross financing By ageing Month-in-arrears 1 481,274 0.71 452,425 0.69 Month-in-arrears 2 229,492 0.34 216,377 0.33 710,766 1.05 668,802 1.02 363 1 2 3 4 5 6 7 8 9 www.bankislam.com FINANCIAL STATEMENTS
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