Page 107 - ACCESS ANNUAL REPORT 2019

NOTES (continued)
A a o nts are in tho sands o hana edis n ess otherwise stated Financia ris anage ent contin ed
redit ris anage ent contin ed
he exposure to any one orrower includin an s is urther restricted y su limits coverin on and off alance sheet exposures. Actual exposures a ainst limits are monitored daily.
he Group employs a ran e o policies and practices to miti ate credit ris . he most traditional o these is the ta in o security or unds advances, which is common practice. he Group reviews the accepta ility o specific classes o collateral or credit ris miti ation. he principal collateral types or loans and advances are mort a es over residential properties, char es over usiness assets such as premises, inventory, and accounts receiva le and char es over financial instruments such as de t securities and e uities.
E pected credit oss eas re ent
I RS 9 outlines a three sta e model or impairment ased on chan es in credit uality since initial reco nition as summarised elow
• A financial instrument that is not credit impaired on initial reco nition is classified in Sta e 1 and has its credit ris continuously monitored y the Group.
• I a si nificant increase in credit ris SICR since initial reco nition is identified, the financial instrument is moved to Sta e 2 ut is not yet deemed to e credit impaired.
• I the financial instrument is credit impaired, the financial instrument is then moved to Sta e 3 .
• inancial instruments in Sta e 1 have their EC measured at an amount e ual to the portion o
li etime expected credit losses that result rom de ault events possi le within the next 12 months. Instruments in Sta es 2 or 3 have their EC measured ased on expected credit losses on a li etime asis.
• A pervasive concept in measurin EC in accordance with I RS 9 is that it should consider orward loo in in ormation.
he ey ud ements and assumptions adopted y the Group in addressin the re uirements o the standard are disclosed elow.
Significant increase in credit ris S R
he Group uses uantitative, ualitative or ac stop criteria as the asis to consider whether financial instruments have experienced a si nificant increase in credit ris .
Quantitative criteria:
he Group uses the pro a ility o de ault PDs o financial instruments as the uantitative measure in assessin or impairment. A financial instrument or roup o financial instruments will e determined to have experienced a SICR i the remainin li etime PDs at the reportin date has increased, compared to the residual li etime PDs expected at the reportin date when the exposure was first reco nised and it exceeds the relevant set threshold. he PDs are determined usin multiple orward economic scenarios.
a itative criteria
he Group per orms an assessment o the financial asset roupin s in order to identi y financial assets with similar characteristics ased on entity and port olio level actors. ualitative criteria current and orward loo in are then determined or the uni ue port olio and su port olio roupin s to e applied in determinin whether there has een a si nificant increase in credit ris or a financial asset or roup o financial assets. he criteria will include actors such as
or oan port olios, i the orrower meets one or more o the ollowin criteria • In short term or earance
• Direct de it cancellation
• Extension to the terms ranted
• Previous arrears within the last twelve 12 months 106