Page 55 - Agib Bank Limited Annual Report 2021
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Islamic financing and investing assets, investment financing assets which are individually significant
securities are summarised as follows: accounts or are not subject to the portfolio-based-
approach.
I. Significant increase in credit risk
The following factors are considered by
As explained in note 3.12.6, ECL are measured as management when determining allowance for
an allowance equal to 12-month ECL for Stage 1 impairment on individual Islamic financing and
assets, or lifetime ECL for Stage 2 or Stage 3 investing assets which are significant:
assets. An asset moves to Stage 2 when its credit
risk has increased significantly since initial The amount expected to be
recognition. IFRS 9 does not define what realised on disposals of collaterals;
constitutes a significant increase in credit risk. In The bank’s ability to enforce its
assessing whether the credit risk of an asset has claim on the collaterals and
significantly increased, the Bank takes into account associated cost of litigation;
qualitative and quantitative reasonable and and
supportable forward looking information. The expected time frame to
complete legal formalities and disposals of
II. Establishing groups of assets with collaterals.
similar credit risk characteristics
The bank policy requires regular review of the level
When ECLs are measured on a collective basis, of impairment allowances on individual facilities
the financial instruments are grouped on the basis and regular valuation of the collateral and its
of shared risk characteristics. The Bank monitors enforceability.
the appropriateness of the credit risk
characteristics on an ongoing basis to assess Impaired Islamic financing and investing assets
whether they continue to be similar. This is continue to be classified as impaired unless they
required in order to ensure that should credit risk are brought fully current and the collection of
characteristics change there is appropriate re- scheduled profit and principal is considered
segmentation of the assets. This may result in new probable.
portfolios being created or assets moving to an
existing portfolio that better reflects the similar Critical accounting judgements in applying the
credit risk characteristics of that group of assets. bank’s accounting policies
III. Models and assumptions used Critical accounting judgements made in applying
the Bank’s accounting policies include:
The Bank uses various models and assumptions
in measuring fair value of financial assets as well Financial asset and liability classification
as in estimating ECL. Judgment is applied in
identifying the most appropriate model for each The bank’s accounting policies provide scope for
type of asset, as well as for determining the assets and liabilities to be designated on inception
assumptions used in these models, including into different accounting categories in certain
assumptions that relate to key drivers of credit
risk. circumstances:
IV. Impairment losses on Islamic financing In classifying financial assets as held-to-
and investing assets maturity, the Bank has determined that it has
both the positive intention and ability to hold
The impairment allowance for Islamic financing and the assets until their maturity date as required
investing assets is established through charges to by accounting policy in note 4.
the statement of comprehensive income in the form
of an impairment allowance for doubtful Islamic Details of the bank’s classification of financial
financing and investing assets. assets and liabilities are given in note 4.
Individually assessed Islamic financing and
investing assets
5.1.1 Operating segments Annual Report and IFRS Financial Statements
Impairment losses for individually assessed Segment information is presented in respect of the
Islamic financing and investing assets are Agib’s business segments. The primary format,
determined by an evaluation of exposure on a
case-by-case basis. This procedure is applied to business segments, is based on the bank’s
all classified corporate and personal Islamic management and internal reporting structure.
Agib Bank Annual Report 2021 www.agib.gm 55
