Page 390 - Bank Muamalat_AR24

388 BANK MUAMALAT MALAYSIA BERHAD

BASEL II
PILLAR 3 DISCLOSURE

4.0 CREDIT RISK (GENERAL DISCLOSURE) (CONT’D)

Credit Quality Financing of Customers (cont’d)
(iv) Impaired financing

Collateral and other credit enhancements
The amount and type of collateral required depends on as assessment of credit risk of the counterparty. Guidelines
are implemented regarding the acceptability of types and collateral and valuation parameters.

The main types of collateral obtained by the Group and the Bank are as follows:
– For home financing - mortgages over residential properties;

– For syndicated financing - charges over the properties being financed;
– For vehicle financing - charges over the vehicles financed;

– For share margin financing - pledges over securities from listed exchange;
– For other financing - charges over business assets such as premises, inventories, trade receivables or deposits.

The financial effect of collateral (quantification of the extent to which collateral and other credit enhancements
mitigate credit risk) held for financing of customer for the Group and the Bank are at 51.24% and 51.25% respectively
as at 31 December 2024 (The Group and the Bank are at 45.47% and 45.48% respectively as at 31 December 2023).
The financial effect of collateral held for other financial assets is not significant.
As at 31 December 2024, the fair value of collateral that the Group and the Bank hold relating to financing of
customers individually determined to be impaired amounts to RM83,639,000 as compared against 31 December 2023
total amount of RM51,677,000. The collateral consists of cash, securities, letters of guarantee, and properties.
The following table presents credit exposure from home financing that are credit Impaired by ranges of
financing-to-value (“FTV”). FTV is calculated as the ratio of the gross amount of the financing to the value of
the collateral.
Group and Bank
2024 2023
RM’000 RM’000

FTV Ratio
Less than 51% 18,289 18,467
51-70% 11,502 17,091
More than 70% 110,770 73,096

Total 140,561 108,654

(v) Repossessed Collateral
It is the Group’s and the Bank’s policy to dispose of repossessed collateral in an orderly manner. The proceeds are
used to reduce or pay the outstanding balance of financing and securities. Collateral’s repossessed by the Bank are
subject to disposal as soon as practicable. Foreclosed properties are recognised in other assets on the statement of
financial position. The Group and the Bank do not occupy repossessed properties for its own business use.