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NOTES TO THE
FINANCIAL STATEMENTS

for the financial year ended 31 december 2020 (continUed)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2.12 Impairment (continued)
Impairment of financial assets (continued)
(a) Impairment of financial assets (continued)
(iii) Stage 3: lifetime ecl – credit impaired (“Stage 3”)
inteGrated annUal rePort 2020 loss allowances for takaful and retakaful receivables are always measured at an amount equal to lifetime ecls.

financial assets are assessed as credit impaired when one or more events that have a negative impact on
the estimated future cash flows of that asset have occurred. for financial assets that have become credit
impaired, a lifetime ecl is recognised.

the Group considers the economic and financial measures announced by the Government, i.e. automatic
moratorium as well as rescheduling and restructuring for eligible customers are granted as part of an
unprecedented government effort to support the economy amid the pandemic, rather than in response to the
financial circumstances of individual customers. Judgement is excercised in determining the significant increase in
credit risk for customers receiving relief assistance and do not automatically result in a stage transfer.
196 When determining whether the credit risk of a financial asset has increased significantly since initial recognition and
when estimating ecls, the Group consider reasonable and supportable information that is relevant and available
without undue cost or effort. this includes both quantitative and qualitative information and analysis, based on
the Group’s historical experience, informed credit assessment and including forward-looking information.
bimb holdinGS berhad 199701008362 (423858-X) past due. the Group also use its internal credit risk grading system and external risk rating to assess deterioration
the Group assume that the credit risk on a financial asset has increased significantly when it is more than 30 days

in credit quality of a financial asset.
the Group assess whether the credit risk on a financial asset has increased significantly on an individual or collective
basis. for the purposes of a collective evaluation of impairment, financial assets are grouped on the basis of similar
risk characteristics, taking into account the asset type, industry, geographical location, collateral type, past-due status
and other relevant factors. these characteristics are relevant to the estimation of future cash flows for groups of such
assets by being indicative of the counterparty’s ability to pay all amounts due according to the contractual terms of

Measurement of ECL
ecls are a probability-weighted estimate of credit losses. credit losses are measured as the present value of all cash
(b) the assets being evaluated.
shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash
flows that the Group expect to receive).

ecls are discounted at the effective profit rate of the financial asset.
(c) Incorporation of forward-looking information
relevant macroeconomic factors are incorporated in the risk parameters as appropriate. the key macroeconomics
variables (“mev”) that are incorporated in determining ecls include, but not limited to, Kuala lumpur composite
index (“Klci”), Unemployment rate, house Price index (“hPi”), consumer Price index (“cPi”), and industrial
Production index (“iPi”). to reflect the impact of the pandemic, the Group extend the mev to, among others,
Gross domestic Product (“GdP”).
forward-looking macroeconomic forecasts are generated by the Group economist as part of the ecl process.
an economic forecast is accompanied with three economic scenarios: a base case, which is the median scenario,
and two less likely scenarios, one upside and one downside. the Group revise the probability of occurring as below:
Economic scenarios As previously disclosed Revised
Base case 60% 60%
Upside 30% 20%
Downside 10% 20%