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2. Material accounting policies (continued)
2.6 Summary of material accounting policies (continued)
g Impairment of financial assets (continued)
iii Credit cards, overdrafts and other revolving facilities (continued)

The ongoing assessment of whether a significant increase in credit risk has occurred for revolving facilities is
similar to other lending products. This is based on shifts in the customer’s internal credit grade, as explained in
Note 22.2.4, but emphasis is also given to qualitative factors such as changes in usage and repayment patterns.

The interest rate used to discount the ECLs for credit cards is based on the interest rate that is expected to be
charged over the expected period of exposure to the facilities. This estimation takes into account that many
facilities are repaid in full each month and are consequently charged no interest.

iv Treasury Bills, Statutory deposits with Central Banks and Due from banks
Treasury Bills, Statutory deposits with Central Banks and Due from banks are short-term funds placed with
Central Banks in the countries where the Group is engaged in the full range of banking and financial activities
and correspondent banks.

v Other assets
The Group applies the simplified approach for other assets as permitted by IFRS 9, which requires expected
lifetime losses to be recognised from initial recognition of the assets. All accounts are grouped together based on
shared credit risk characteristics and future cash flows are discounted at an appropriate rate. Rates are calculated
based on historical payment profiles and were adjusted to incorporate forward looking information as of the
Consolidated statement of financial position date.

vi Financial guarantees, letters of credit and undrawn loan commitments
The Group issues financial guarantees, letters of credit and loan commitments.
Financial guarantees, letters of credit and loan commitments are off-balance sheet instruments and have no
history of default.

vii Forward looking information
The Group integrates Forward-Looking Indicators (FLIs) and macroeconomic factors into its ECL calculations to
estimate potential future credit risks. Key FLIs include interest rates, inflation trends, unemployment rates, and
industry-specific forecasts, which help assess the probability of default for financial assets. Broader macroeconomic
factors such as GDP growth, current account balance, fiscal deficit and foreign exchange reserves are also
considered. The Group uses scenario analysis and probability-weighted outcomes, best to worst case, to model
different economic conditions, ensuring more accurate and robust ECL estimates.

h Collateral valuation
To mitigate its credit risks on financial assets, the Group seeks to use collateral, where possible. The collateral comes in
various forms, such as cash, securities, letters of credit/guarantees, real estate, receivables, inventories and other non-
financial assets. Collateral, unless repossessed, is not recorded on the Group’s Consolidated statement of financial
position. However, the fair value of collateral affects the calculation of ECLs. It is generally assessed at inception and
re-assessed on a periodic basis.

To the extent possible, the Group uses active market data for valuing financial assets held as collateral. Other financial
assets which do not have readily determinable market values are valued using models. Non-financial collateral, such
as real estate, is valued based on independent valuations and other data provided by third parties.