Page 313 - Bank-Muamalat_Annual-Report-2023

ANNUAL REPORT 2023
OUR NUMBERS

47. 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.
2023 2022
Group and Bank RM’000 RM’000

Purchase of transport vehicles 11,477 7,163
Purchase of landed properties of which:
- residential 238,530 161,851
- non-residential 12,596 10,357
Personal use 151,997 91,564
Construction 649 285
Working capital 23,055 13,047
Other purpose 3,819 1,292
442,123 285,559

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
45.47% and 45.48%, respectively, as at 31 December 2023 (the Group and the Bank are at 39.72% and
39.74% as at 31 December 2022). Meanwhile, the financial effect of collateral held for other financial assets
is not significant.

As at 31 December 2023, the fair value of collateral that the Group and the Bank hold relating to financing
of customers individually determined to be impaired amounts to RM51,677,000 as compared against
31 December 2022 total amount of RM18,227,000. 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 pay 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.

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