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ANNUAL REPORT 2023
                                                                                                        OUR NUMBERS














            47.  FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D.)
                 (a)   Credit  risk  (cont’d.)

                     Credit exposures are controlled via a thorough credit assessment process which include, among others, assessing
                     the  adequacy  of  the  identified  source  of  payments  and/or  income  generation  from  the  customer,  as  well  as
                     determining  the  appropriate  structure  for  financing.

                     As a supporting tool for the assessment, the Group and the Bank adopt credit risk rating (internal/external)
                     mechanisms.  The  internal  risk  rating/grading  mechanism  is  consistent  with  the  nature,  size  and  complexity  of
                     the  Group’s  and  the  Bank’s  activities.  It  is  also  in  compliance  with  the  regulatory  authority’s  requirements.
                     Where  applicable,  the  external  rating  assessment  will  be  applied.  This  is  provided  by  more  than  one  of
                     the  selected  reputable  External  Credit  Assessment  Institutions  (“ECAI”).

                     To mitigate credit concentration risks, the Group and the Bank set exposure limits to individual/single customer,
                     groups of related customers, connected parties, global counterparty, industry/sector and other various funded and
                     non-funded  exposures.  This  is  monitored  and  enforced  throughout  the  credit  delivery  process.

                     The Group and the Bank also introduced the Credit Risk Mitigation Techniques (“CRMT”) to ascertain the strength
                     of collaterals and securities pledged for financing. The technique outlines the criteria for the eligibility and valuation
                     as  well  as  the  monitoring  process  of  the  collaterals  and  securities  pledged.
                     The  Group’s  and  the  Bank’s  credit  risk  disclosures  also  cover  past  due  and  impaired  financing  including  the
                     approaches  in  determining  the  individual  and  collective  impairment  provisions.
                     Included  in  financing  of  customers  is  a  financing  given  to  a  corporate  customer  which  are  hedged  by  profit  rate
                     derivatives.  The  hedge  achieved  the  criteria  for  hedge  accounting  and  the  financing  are  carried  at  fair  value.

                     (i)   Maximum  credit  risk  exposures  and  credit  risk  concentration
                          The following tables present the Group’s and the Bank’s maximum exposure to credit risk (without taking
                          account  of  any  collateral  held  or  other  credit  enhancements)  for  each  class  of  financial  assets,  including
                          derivatives with positive fair values, and commitments and contingencies. Where financial assets are recorded
                          at fair value, the amounts shown represent the current credit risk exposure but not the maximum risk exposure
                          that  could  arise  in  the  future  as  a  result  of  changes  in  values.  Included  in  commitments  and  contingencies
                          are contingent liabilities and credit commitments. For contingent liabilities, the maximum exposures to credit
                          risk is the maximum amount that the Group or the Bank would have to pay if the obligations for which the
                          instruments  are  issued  are  called  upon.  For  credit  commitments,  the  maximum  exposure  to  credit  risk  is  the
                          full  amount  of  undrawn  credit  granted  to  customers  and  derivative  financial  instruments.

                          A concentration credit risk exists when a number of counterparties are engaged in similar activities and have
                          similar economic characteristics that would cause their ability to meet contractual obligations to be similarly
                          affected  by  changes  in  economic  and  other  conditions.

                          By  sector  analysis
                          The  presented  analysis  of  credit  risk  concentration  relates  to  financial  assets,  including  derivatives  with
                          positive fair values, and commitments and contingencies, subject to credit risk and are based on the sector
                          in which the counterparties are engaged (for non-individual counterparties) or the economic purpose of
                          the  credit  exposure  (for  individuals).  The  exposures  to  credit  risk  are  presented  without  taking  into  account
                          of  any  collateral  held  or  other  credit  enhancements.









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