41. FINANCIAL RISK MANAGEMENT (CONTINUED) (b) Credit risk (continued) Credit quality of financing, advances and others (continued) Key macroeconomic variables The following table shows certain key macroeconomic variables (“MEV”) used in modelling the allowance for credit losses for Stages 1 and 2. For the base, upside and downside scenarios, the projections are provided for the next 12 months and for the remaining forecast period, which represents a medium-term view. Base scenario Upside scenario Downside scenario Next 12 months (2024) Remaining forecast period (2025) Next 12 months (2024) Remaining forecast period (2025) Next 12 months (2024) Remaining forecast period (2025) Consumer Price Index (“CPI”) 2.28% 2.15% 3.08% 2.95% 1.23% 1.15% Gross Domestic Production (“GDP”) 4.70% 4.95% 6.10% 6.37% –1.53% –1.21% House Price Index (“HPI”) 2.14% 2.27% 2.84% 2.98% 1.43% 1.46% Kuala Lumpur Composite Index (“KLCI”) 1700.00 1800.00 1800.85 1900.85 1088.00 1152.00 An increase in unemployment rate or CPI will generally correlate with higher allowances for credit losses, whereas an increase in the other macroeconomic factors (KLCI, HPI and GDP) will generally correlate with lower allowances for credit losses. 365 1 2 3 4 5 6 7 8 9 www.bankislam.com FINANCIAL STATEMENTS
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