Page 389 - Bank-Muamalat-AR2020

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Our Performance Sustainability Statement Governance Our Numbers Other Information

4.0 CrEDIT rISk (GENErAL DISCLOSurE) (CONT’D)
Credit quality Financing of Customers (cont’d)

(iv) Impaired financing (cont’d)
Collateral and other credit enhancements
The amount and type of collateral required depends on as assessment of credit risk of the counterparty. Guidelines are
implemented regarding the acceptability of types and collateral and valuation parameters.
The main types of collateral obtained by the Group and the Bank are as follows:

– For home financing - mortgages over residential properties;
– For syndicated financing - charges over the properties being financed;

– For hire purchase financing - charges over the vehicles financed;
– For share margin financing - pledges over securities from listed exchange;
– For other financing - charges over business assets such as premises, inventories, trade receivables or deposits.

The financial effect of collateral (quantification of the extent to which collateral and other credit enhancements
mitigate credit risk) held for financing of customer for the Group and the Bank are at 87.2 and 87.2% respectively as at
31 December 2020 (The Group and the Bank are at 88.1% and 88.1% respectively as at 31 December 2019). The financial
effect of collateral held for other financial assets is not significant.
As at 31 December 2020, the fair value of collateral that the Group and the Bank hold relating to financing of customers
individually determined to be impaired amounts to RM58,150,345 as compared against 31 December 2019 total amount of
RM41,210,434. The collateral consists of cash, securities, letters of guarantee, and properties.

(v) repossessed Collateral
It is the Group’s and the Bank’s policy to dispose of repossessed collateral in an orderly manner. The proceeds are used
to reduce or pay the outstanding balance of financing and securities. Collateral’s repossessed by the Bank are subject to
disposal as soon as practicable. Foreclosed properties are recognised in other assets on the statement of financial position.
The Group and the Bank do not occupy repossessed properties for its own business use.