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ANNUAL REPORT 2021 95

InDEPEnDEnT auDITORS’ REPORT
to the members of Export-Import Bank of malaysia Berhad
(Incorporated in malaysia)

Key audit matters (cont’d.)

Risk area and rationale Our response

Expected credit losses (“ECL”) of loans, advances and financing,
and financial investments not carried at fair value through profit
or loss
As at 31 December 2021, loans, advances and financing Our audit procedures included the assessment of controls over
represent 41.91% of the total assets of the Group and of the the approval, recording and monitoring of loans, advances and
Bank, respectively, and financial investments not carried at fair financing, and financial investments not carried at fair value,
value through profit or loss represent approximately 6.27% of and evaluating the methodologies, inputs and assumptions
the total assets of the Group and of the Bank, respectively. used by the Group and the Bank in calculating the respective
ECL allowances for the respective underlying assets.
As at 31 December 2021, ECL allowance amounting to
approximately RM2.00 billion has been provided for the For measurement of individual ECL allowance for stage 3
loans, advances and financing of the Group and of the Bank, impaired loans, advances and financing and financial investments
respectively. not carried at fair value, we tested a sample of loans, advances
and financing and financial investments not carried at fair
The measurement of ECL requires the use of a forward-looking value to evaluate the timely identification by the Group and the
ECL approach, and the application of significant judgement Bank of exposures with significant deterioration in credit quality
and increased complexity which include the identification of or which have been impaired.
on and off-balance sheet credit exposures, the determination
of the different stages of credit risk of the underlying assets, For cases in stage 3 which have defaulted, we assessed the
the assessment of expected future cash flows of the respective Group’s and the Bank’s specific assumptions on the expected
assets, available proxies or benchmarks for collective future cash flows for each asset, including the value of
assessment, forward looking macroeconomic factors, realisable collaterals based on available market information
probability-weighted multiple scenarios and the application of and the multiple scenarios considered. We also challenged
Management Overlays (MO). the assumptions and compared estimates to external evidence
where available.
Management also uses externally available industry and
financial data, as appropriate, to supplement internally available With respect to the measurement of collective ECL allowances
credit experiences. for stage 1 and stage 2 accounts/assets, we verified the
reasonableness of the ECL models, including model input,
Refer to summary of significant accounting policies in model design and model performance. We challenged
Note 2.4(g), significant accounting estimates and judgement whether historic or historical experience is representative
in Note 3 and the disclosures of loans, advances and financing of current circumstances and of the recent losses incurred
and investments in Notes 7 and 6, respectively, to the financial in the portfolios and assessed the reasonableness of forward
statements. looking adjustments, macroeconomic factor analysis and
probability-weighted multiple scenarios.
We involved our credit modelling specialists in the
performance of these procedures where their specific expertise
was required.

We also assessed whether the financial statements’ disclosures
appropriately reflect the Group’s and the Bank’s exposures to
credit risk.