Investor Presentaiton
NOTES TO THE GROUP CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
46
RISK MANAGEMENT (CONTINUED)
I.
Amounts arising from ECL
NOTES TO THE GROUP CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
46
RISK MANAGEMENT (CONTINUED)
J.
Covid-19 and Expected Credit Loss (ECL)
Loans and receivables
Total
34,984,811
AED 000
12-month ECL
31 December 2021
Balance at 1 January
4,612,683
Lifetime ECL
not credit-
impaired
5,697,198
Transfers from stage 1
(392,354)
Transfers from stage 2
559,417
Transfers from stage 3
368,971
(2,118,652)
77,741
Allowances for impairment made
(687,483)
3,710,592
Lifetime
ECL credit-
impaired
24,674,930
23,383
1,559,235
(77,741)
4,256,550
7,279,659
during the year
Write back/recoveries made
(1,044,799)
(1,044,799)
during the year
Amounts written off during the
(1,246,876)
year
Exchange and other adjustments
Closing Balance
(244,929)
3,847,334
(806,574)
6,929,276
(1,735,816)
26,408,866
(1,246,876)
(2,787,319)
37,185,476
AED 000
12-month ECL
31 December 2020
Lifetime ECL
not credit-
impaired
Lifetime
ECL credit-
impaired
Total
Balance at 1 January
4,675,729
3,631,414
20,919,252
29,226,395
Transfers from stage 1
(252,932)
Transfers from stage 2
506,562
Transfers from stage 3
1,473
212,367
(1,692,522)
93,552
Allowances for impairment made
during the year
(339,591)
3,145,012
40,565
1,185,960
(95,025)
5,655,053
8,460,474
(584,935)
(584,935)
the year
21,442
4,612,683
307,375
5,697,198
(2,096,710)
(349,230)
24,674,930
(2,096,710)
(20,413)
34,984,811
Write back/recoveries made during
Amounts written off during the
year
Exchange and other adjustments
Closing Balance
The contractual amount outstanding on loans and receivables which were written off during the year, and are still
subject to enforcement activity amounted to AED 1,247 million (2020: AED 2,097 million).
Novel coronavirus (Covid-19) continues to disrupt businesses and economic activity in 2021. In response,
governments and central banks extended economic support and relief measures (including payment deferrals)
launched last year to lessen the impact on individuals and corporates.
In determination of 2021 ECL, the Group has considered potential impact caused by Covid-19 pandemic (based
upon available information) and taken into account economic support and relief measures of governments
and central banks. The Group has also considered the notices issued by the Central Bank of UAE with regards
to the Targeted Economic Support Scheme (TESS)' and Treatment of IFRS9 Expected Credit Loss in the context
of Covid-19 crisis' as well as the guidance issued by the International Accounting Standards Board (IASB).
The Group has a dedicated IFRS 9 governance process established to review and approve IFRS 9 Stage
migrations, management overlays to ECL estimates, and macro-economic scenarios and weightings.
Significant Increase in Credit Risk (SICR)
Under IFRS 9, loans are required to be moved from Stage 1 to Stage 2 if and only if they have been the subject
of SICR since origination. SICR occurs when there has been a significant increase in risk of default.
The Group continues to assess borrowers for other indicators of unlikeliness to pay, taking into consideration
the underlying cause of any financial difficulty and whether it is likely to be temporary as a result of Covid-19 or
long term.
The Group continues to support its impacted customers through a program of payment relief that was initiated
in 2020 by deferring interest/principal due. These payment reliefs are considered as short-term liquidity
support to address borrower cash flow issues. The Group believes that availing payment reliefs does not
automatically trigger SICR where the impact on customer's business is expected to be short term. For all other
customers, the Group continues to consider severity and extent of potential Covid-19 impact on economic
sector and future outlook, cash flow and financial strength, agility and change in risk profile along with the past
track record in determining SICR.
The accounting impact of the extension of credit facilities due to Covid-19 has been assessed and has been
treated as per the requirements of IFRS 9 for modification of terms of arrangement.
Forward Looking Information
The Group has assessed the macro-economic scenarios and associated weights and analysed their impact on
2021 ECL estimates. Accordingly, updated MEVS were used with the associated weights remaining unchanged
from those used at year end 2020. The Group has also applied portfolio-level ECL adjustments to retail
customers availing deferrals based upon employment status and level of salary inflows. The Group continues
to assess individually significant exposures for any adverse movements due to Covid-19.
As with any economic forecasts, the projections and likelihoods of the occurrence are subject to
inherent uncertainty and therefore the actual outcomes may be significantly different to those projected.
105
EMIRATES NBD BANK PJSC - GROUP CONSOLIDATED FINANCIAL STATEMENTS - FOR THE YEAR ENDED 31 DECEMBER 2021
106
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