Page 263 - BAM ONE REPORT 2565 (ENGLISH VERSION)

257

Form 56-1 One Report 2022
4.6 Allowance for expected credit loss

Allowance for expected credit loss for loans purchased of receivables

The Company applies the purchased or originated credit-impaired financial asset approach

for loans purchased of receivables, as well as the advance for expenses on asset acquisition
only on the portion which will be transferred to be an obligation to the debtors.

The Company records allowance for expected credit loss when there are changes in the

estimated cash inflows expected from debtors, discounting the projected cash flows with
reference to historical data and adjusted to reflect current observable data as well as forward

looking information that is supportable and reasonable, provided it can be shown to be
statistically related. Making such estimates involve the appropriate exercise of judgement.
However, the Company has established a process to review, monitor the methodologies,

assumptions and forward-looking macroeconomic scenarios on a regular basis. In addition,
expected credit loss also include a management overlay.

The Company recognises change in expected credit loss over the expected lifetime as
impairment gain or loss in profit or loss.

Allowance for expected credit loss on other financial assets

The Company applies general approach to calculate allowance for expected credit loss on
other financial assets, such as deposits at financial institutions, investments in debt

instruments measured at amortised cost, installment sale receivables and accrued interest
receivables, accrued income from auction sales, employee receivables and accrued interest
receivables and advance for expenses on asset acquisition which will be transferred to be

accrued income from auction sale.

The Company classifies the financial assets into three groups ( three- stage approach) to
measure the allowance for expected credit loss, with the classification of the financial assets
determined on the basis of the change in credit risk since the initial recognition, as follows:

Group 1: Financial assets with no significant increase in credit risk (Performing)

For financial assets with no significant increase in credit risk since the initial recognition date,
the Company recognises expected credit loss at the amount equal to 12-month expected

credit loss. For financial assets with maturity of less than 12 months, the Company uses a
probability of default that corresponds to remaining terms of the contract.

Group 2: Financial assets with significant increases in credit risk (Under-performing)

For financial assets with significant increase in credit risk since the initial recognition but that
are not credit-impaired, the Company recognises the expected credit loss at the amount equal

to expected credit loss over the expected lifetime of the financial assets.

9