Page 141 - EXIM-Bank_Annual-Report-2023

Management Discussion and Analysis Ensuring Sustainability Commitment to Lead Upholding Accountability Financial Statements 139

Notes to the fiNaNcial statemeNts

3. SIGNIFICANT ACCOuNTING ESTIMATES AND JuDGEMENT (cont’d)
3.2 Estimates and assumptions (cont’d)

(a) uncertainty in accounting estimates for liabilities of insurance business (Note 44) (cont’d)
Generally, insurance/takaful liabilities are determined based upon previous claims experience, existing knowledge
of events, the terms and conditions of the relevant policies and interpretation of circumstances. Particularly relevant
is past experience with similar cases, historical claims development trends, legislative changes, judicial decisions
and economic conditions. It is certain that actual future premiums/contribution and claims amount will not exactly
develop as projected and may vary from the projections.

The estimates of insurance/takaful contract liabilities are therefore sensitive to various factors and uncertainties.
The establishment of technical provisions in an inherently uncertain process and, as a consequence of this
uncertainty, the eventual collection of premium/contribution and payment of claims may vary from the initial
estimates.
There may be significant reporting lags between the occurrence of an insured event and the time it is actually
reported. Following the identification and notification of an insured loss, there may still be uncertainty as to the
magnitude of the claim. There are many factors that will determine the level of uncertainty such as inflation,
inconsistent judicial interpretations, legislative changes and claims handling procedures.
(b) Management overlays for ECL (Note 9(x))
As the current MFRS 9 models are not expected to generate levels of ECL with sufficient reliability in view of the
unprecedented COVID-19 pandemic in prior years are new emerging risks overlays and post-model adjustments
have been applied to determine a sufficient overall level of ECL as at 31 December 2023.
These overlays and post-model adjustments were taken to reflect the latest macroeconomic outlook not captured
in the modelled outcome and the potential impact to delinquencies and defaults when the various relief and
support measures expire.
The overlays and post-model adjustments involved significant level of judgement and reflect the management’s
views of possible severities of the pandemic and paths of recovery in the forward-looking assessment for ECL
estimation purposes.

The impact of these post-model adjustments were estimated at both portfolio and vulnerable obligors level
amounting to RM35.05 million (2022: RM66.37 million) for the Group and the Bank as at 31 December 2023.

4. CASh AND BANk BALANCES

Group and Bank
2023 2022
rM’000 rM’000
Cash and bank balances 15,744 28,986