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222 KUMPULAN WANG PERSARAAN (DIPERBADANKAN) FoR BEttER REtURNS

notes to the
financial statements
for the year ended 31 december 2022

33. FINANCIAL RISK (CONTINUED)
(d) Credit risk

credit risk is the risk of loss that may arise on outstanding financial instruments in the event of defaults on
the obligations of the counterparty. the group’s and KWap’s exposure to credit risk arise primarily from loan
receivables. for other financial assets (including investments in bonds, money market instruments and deposits
with banks), the group and KWap minimise the credit risk via exclusive transactions with high credit rating
counterparties.

as at the reporting date, the group’s and KWap’s maximum exposure to credit risk are represented by the
carrying amount of each class of financial assets recognised in the statement of financial position, including
derivatives with positive fair value.
(i) Credit risk management

the group and KWap consider the probability of default upon the initial recognition of asset and whether
there has been a significant increase in credit risk on an ongoing basis throughout each reporting period.
to assess whether there is a significant increase in credit risk, the group and KWap compare the risk of
a default occurring on the asset as at the reporting date with the risk of default as at the date of initial
recognition. available, reasonable and supportive forward-looking information are taken into consideration
and the following indicators are incorporated:

• Internal credit rating;
• External credit rating (as far as available);
• Actual or expected significant adverse changes in business, financial or economic conditions that are
expected to cause a significant change to the borrower’s ability to meet its obligations; and
• Significant changes in the value of the collateral supporting the obligation or in the quality of third-party
guarantees or credit enhancements.

macroeconomic information (such as market interest rates or growth rates) is incorporated as part of the
internal rating model.

regardless of the analysis above, a significant increase in credit risk is presumed if a debtor is more than
30 days past due in making a contractual payment.

a default on a financial asset is the failure of the counterparty to make contractual payments within 90 days
of when they fall due.
all of the financial assets are considered to be low risk, and thus the recognition of the provision of impairment
during the reporting year was limited to 12-months ecl. management consider ‘low risk’ to be the investment
grade credit rating by a minimum of one (1) major credit rating agency.