Page 418 - Bank-Muamalat_Annual-Report-2023

BANK MUAMALAT MALAYSIA BERHAD

BASEL II
PILLAR 3 DISCLOSURE

6.0 CREDIT RISK MITIGATION (“CRM”) DISCLOSURES UNDER THE STANDARDISED APPROACH
Upon assessment of a customer’s credit standing and payment capacity and identification of the proposed financing’s
source of payment, the Bank may provide a financing facility on a secured, partially secured or unsecured basis.
In mitigating its credit exposure, the Group and the Bank may employ Credit Risk Mitigants in the form of collaterals and
other supports. Examples of these CRMs include charges over residential and commercial properties being financed;
pledge over shares and marketable securities, ownership claims over vehicles being financed, and supports in the form
of debentures, assignments and guarantees.

The Bank utilise specific techniques to identify eligible collaterals and securities and ascertain their value, and subsequently,
implement adequate monitoring process to ensure continued coverage and enforceability.
Credit documentation, administration and disbursement are carried out under clear guidelines and procedures to ensure
protection and enforceability of collaterals and other credit risk mitigants. Valuation updates of collaterals are concurrently
done during the periodic review of the financing facilities to reflect current market value and ensure adequacy and
continued coverage.
The following tables present the credit exposures covered by eligible financial collateral and financial guarantees as
defined under the Standardised Approach. Eligible financial collateral consists primarily of cash, securities from listed
exchange, unit trust or marketable securities. The Group and the Bank do not have any credit exposure, which is reduced
through the application of other eligible collateral.
Table 17: Credit risk mitigation on credit exposures

Total
Exposures
Covered by
Eligible
Gross Financial *Net
Group Exposures Collateral Exposures
31 December 2023 RM’000 RM’000 RM’000

Credit Risk
(a) On Balance sheet exposures
Sovereign/Central banks 8,147,144 - 8,147,144
Public sector entities 1,111,507 - 1,111,507
Banks, Development Financial Institution & MDBs 111,200 - 111,200
Takaful Cos, Securities Firms & Fund Managers 78,217 - 78,217
Corporates 8,693,162 - 8,693,162
Regulatory retail 12,046,770 - 12,046,770
Residential real estate 8,280,790 - 8,280,790
Higher risk assets 55,816 - 55,816
Other assets 359,101 - 359,101
Defaulted exposure 159,840 - 159,840
39,043,547 - 39,043,547

(b) Off-Balance Sheet Exposures
Credit-related off-balance sheet exposure 1,569,924 - 1,569,924
Islamic derivative financial instruments 38,934 - 38,934

1,608,858 - 1,608,858

Total Credit Exposures 652,405 - 40,652,405

* After netting and credit risk mitigation

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