Page 410 - Bank-Muamalat_Annual-Report-2023

BANK MUAMALAT MALAYSIA BERHAD

BASEL II
PILLAR 3 DISCLOSURE

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 vehicle 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 45.47 and 45.48% respectively
as at 31 December 2023 (The Group and the Bank are at 39.72% and 39.74% respectively as at 31 December 2022).
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.

(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.

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