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Management Discussion and Analysis Ensuring Sustainability Commitment to Lead Upholding Accountability Financial Statements 105

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 2023, loans, advances and Our audit procedures included the assessment of controls over
financing represent 52.44% and 51.89% of the total the approval, recording and monitoring of loans, advances and
assets of the Group and of the Bank, respectively, and financing, and financial investments not carried at fair value, and
financial investments not carried at fair value represent evaluating the methodologies, inputs and assumptions used by the
approximately 12.20% and 12.07% of the total assets of Group and the Bank in calculating the respective ECL allowances for
the Group and of the Bank, respectively. the respective underlying assets.
As at 31 December 2023, ECL allowance amounting For measurement of individual ECL allowance for stage 3 impaired
to approximately RM1.66 billion has been provided for loans, advances and financing and financial investments not carried
the loans, advances and financing of the Group and of at fair value, we tested a sample of loans, advances and financing
the Bank, respectively, and ECL allowance amounting and financial investments not carried at fair value to evaluate the
to approximately RM0.36 billion has been provided for timely identification by the Group and the Bank of exposures
financial investments not carried at fair value of the Group with significant deterioration in credit quality or which have been
and of the Bank respectively. impaired.

The measurement of ECL requires the use of a For stage 3 assets which have defaulted, we assessed the Group’s

forward-looking ECL approach, and the application and the Bank’s specific assumptions on the expected future cash
of significant judgement and increased complexity flows for each asset, including the value of realisable collaterals
which include the identification of on and off-balance based on available market information and the multiple scenarios
sheet credit exposures, the determination of the considered. We also challenged the assumptions and compared
different stages of credit risk of the underlying assets, estimates to external evidence where available.
the assessment of expected future cash flows of the
respective assets, available proxies or benchmarks for With respect to the measurement of collective ECL allowances for
collective assessment, forward looking macroeconomic stage 1 and stage 2 accounts/assets, we verified the reasonableness
factors, probability-weighted multiple scenarios and the of the ECL models, including model input, model design and model
application of Management Overlays (“MO”). performance. We challenged whether historic or historical experience
is representative of current circumstances and of the recent losses
Management also uses externally available industry and incurred in the portfolios and assessed the reasonableness of
financial data, as appropriate, to supplement internally forward looking adjustments, macroeconomic factor analysis and
available credit experiences. probability-weighted multiple scenarios.

Refer to summary of material accounting policy We involved our credit modelling specialists in the performance of
information, significant accounting estimates and these procedures where their specific expertise was required.
judgement and the disclosures of loans, advances and
financing and investments. We also assessed whether the financial statements’ disclosures
appropriately reflect the Group’s and the Bank’s exposures to credit
risk.