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ANNUAL REPORT 2021 191

Notes to the fiNaNcial statemeNts

42. financial risk management POlicies (cOnt’D.)

Credit risk management (cont’d.)
Impairment of financial assets
The Group and the Bank individually assesses its financial assets for any objective evidence of impairment as a result of one or
more loss events that occurred after the initial recognition. In determining that there is objective evidence of an impaired loss,
the Group and the Bank adopted a systematic mechanism for a prompt trigger of impairment test whereby the triggers are
based on obligatory and judgmental event triggers.

When there is objective evidence of impairment of the financial assets, the classification of these assets as impaired shall
be endorsed and approved by Management Committee (“MC”). Impairment losses are recorded as charges to the statement
of profit and loss. The carrying amount of impaired loans, advances and financing on the statement of financial position is
reduced through the use of impairment allowance account. Losses expected from future events are not recognised.

Credit risk exposure
Maximum exposure to credit risk without taking into account of any collateral and other credit enhancements:
Maximum
exposure to Collateral Net
Group and Bank credit risk value exposures
RM’000 RM’000 RM’000

2021

Credit exposure for on-balance sheet assets:
Cash and bank balances 49,513 - 49,513
Deposits and placements with banks and other financial institutions 3,126,776 - 3,126,776
Financial investments 1,107,639 - 1,107,639
Loans, advances and financing 3,301,561 2,314,113 987,448
Insurance receivables 45 - 45
Net derivative financial instruments 79,464 - 79,464
Other assets excluding tax prepayment 65,864 - 65,864
7,730,862 2,314,113 5,416,749

Credit exposure for off-balance sheet assets:
Banking operations commitments 1,258,855 - 1,258,855
Insurance operations commitments
Short term 319,069 - 319,069
Medium/Long term 277,767 - 277,767
1,855,691 - 1,855,691

9,586,553 2,314,113 7,272,440