Page 297 - Bank-Muamalat-Annual-Report-2021

ANNUAL REPORT 2021 295
SUSTAINABILITY STATEMENT OUR GOVERNANCE OUR NUMBERS OTHER INFORMATION

46. fINANcIAL RIsk MANAGeMeNT OBJecTIves AND POLIcIes (cONT’D.)

(a) credit risk (cont’d.)
(ii) credit quality for financing of customers (cont’d.)
Past due but not impaired (cont’d.)

The following table presents an analysis of the past due but not impaired financing by economic purpose.
2021 2020
Group and Bank RM’000 RM’000

Purchase of transport vehicles 4,360 8,886
Purchase of landed properties of which:
- residential 18,498 178,297
- non-residential 515 15,644
Personal use 14,890 50,518
Construction 1,092 106
Working capital 160 199
Other purpose 239 825
39,754 254,475

collateral and other credit enhancements

The amount and type of collateral required depends on assessment of credit risk of the counterparty. Guidelines
are implemented regarding the acceptability of types of 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; and
- For other financing - charges over business assets such as premises, inventories, trade receivables or deposits.

The financial effect of collateral (i.e. 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 82.4% and 82.5%,
respectively, as at 31 December 2021 (the Group and the Bank are at 87.2% and 87.2% as at 31 December
2020). Meanwhile, the financial effect of collateral held for other financial assets is not significant.
As at 31 December 2021, the fair value of collateral that the Group and the Bank hold relating to financing of
customers individually determined to be impaired amounts to RM55,757,689 as compared against 31 December
2020 total amount of RM58,150,345. The collateral consists of cash, securities, letters of guarantee, and properties.

Repossessed collateral
It is the Group’s and the Bank’s policy that dictates disposal of repossessed collateral to be carried out in an orderly
manner. The proceeds are used to reduce or repay the outstanding balance of financing and securities. Collateral
repossessed are subject to disposal as soon as it is practical to do so. Foreclosed properties are recognised in
other assets on the statement of financial position. At present, the Group and the Bank do not occupy repossessed
properties for its own business use.