Annual Report 2021

ANNUAL REPORT 2021 105 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 2.11 Impairment of financial assets and financial guarantee contracts (continued) Significant increase in credit risk (continued) Irrespective of the outcome of the above assessment, the Group presumes that the credit risk has increased significantly since initial recognition when contractual payments are more than 30 days past due, unless the Group has reasonable and supportable information that demonstrates otherwise. For financial guarantee contracts, the date that the Group becomes a party to the irrevocable commitment is considered to be the date of initial recognition for the purposes of assessing impairment. In assessing whether there has been a significant increase in the credit risk since initial recognition of a financial guarantee contracts, the Group considers the changes in the risk that the specified debtor will default on the contract. The Group regularly monitors the effectiveness of the criteria used to identify whether there has been a significant increase in credit risk and revises them as appropriate to ensure that the criteria are capable of identifying significant increase in credit risk before the amount becomes past due. Definition of default The Group considers that default has occurred when the instrument is more than 90 days past due unless the Group has reasonable and supportable information to demonstrate that a more lagging default criterion is more appropriate. Credit-impaired financial assets A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is credit impaired includes observable data about the following events: ‧ significant financial difficulty of the issuer or the borrower; ‧ a breach of contract, such as a default or past due event; ‧ the lender(s) of the borrower, for economic or contractual reasons relating to the borrower’ financial difficulty, having granted to the borrower a concession(s) that the lender(s) would not otherwise consider; ‧ it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation; or ‧ the disappearance of an active market for that financial asset because of financial difficulties.