Measurement of the Expected Credit Loss (‘ECL’) Cim Finance has adopted the international accounting standards IFRS 9, which integrates past events and historical data, current conditions, and reasonable, supportable and unbiased forward-looking information to measure ECLs over the life of existing exposures. Consistent with the requirements of IFRS 9, the Group has considered both quantitative and qualitative information in the assessment of significant increases in credit risk. The ECL model was most recently updated in 2024. Governance and Post-Model Adjustments The Group’s IFRS 9 models for probability of default (‘PD’), exposure at default (‘EAD’) and loss given default (‘LGD’) are governed by the ECL standard, which is approved by the Risk Management Committee and the Board. Post-model adjustments were applied when deemed necessary by management and/or the Board to ensure an adequate level of overall ECL provisioning. Stage Classification CFSL classifies its financial assets into three stages, based on material changes in the credit risk: The transition from recognising 12-month ECLs (Stage 1) to lifetime ECLs (Stage 2) in IFRS 9 is determined by a significant increase in credit risk relative to the risk at initial recognition. This transition underscores the instrument’s evolving credit profile over its remaining life. Upon the origination or purchase of a financial instrument, 12-month Expected Credit Losses (ECLs) are recognised in profit or loss, with a corresponding loss allowance established as an initial estimate of credit risk. Interest revenue is calculated based on the gross carrying amount of the loan, without adjusting for ECLs. If there is a significant increase in credit risk that is not considered low, the recognition shifts to lifetime ECLs, which are also recorded in profit or loss. Interest revenue calculation remains consistent with that of Stage 1. When a financial asset becomes credit-impaired, it transitions to Stage 3. Interest revenue is calculated based on the asset’s amortised cost (gross carrying amount minus the loss allowance). Lifetime ECLs are recognised, and these assets are assessed individually, reflecting the severity of credit impairment. Stage 1 (Low credit risk) Stage 2 (Significant increase in credit risk since initial recognition) Stage 3 (Credit impaired) 89 Introduction Group Overview Leadership Strategy & Performance Risk Management Corporate Governance Statutory Disclosures Financial
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