6.2.11 Loss allowance
Loss allowance
- Discount unwind within ECL due to the passage of time, as ECL is measured on a present value basis; and
- Financial assets derecognized during the period and write-offs of allowances related to assets that were written off during the period.
The following table explain the changes in the loss allowance between the beginning and the end of the annual period due to these factors:
| 2020 | ||||
| Stage 1 | Stage 2 | Stage 3 | ||
| 12-month ECL | Lifetime ECL | Lifetime ECL | Total | |
| AED’000 | AED’000 | AED’000 | AED’000 | |
| Loans and advances | ||||
| Loss allowance as at 1 January | ||||
| Transfers | 15,956 | 14,382 | 385,831 | 416,169 |
| Transfer from Stage 1 to Stage 2 | (2,492) | 30,395 | – | 27,903 |
| Transfer from Stage 1 to Stage 3 | (731) | – | 10,251 | 9,520 |
| Transfer from Stage 2 to Stage 1 | 450 | (1,646) | – | (1,196) |
| Transfer from Stage 2 to Stage 3 | – | (3,365) | 34,431 | 31,066 |
| Transfer from Stage 3 to Stage 1 | 257 | – | (9,125) | (8,868) |
| Transfer from Stage 3 to Stage 2 | – | 1,147 | (3,017) | (1,870) |
| New financial assets originated | 1,385 | 2,032 | 2,162 | 5,579 |
| Net remeasurement of loss allowance | (2,536) | (286) | 7,525 | 4,703 |
| Reversal of no longer required impairment charges | ( 330 ) | ( 698 ) | (102,926) | (103,954) |
| ———————— | ———————— | ———————— | ———————— | |
| Loss allowance as at 31 December 2020 | 11,959 | 41,961 | 325,132 | 379,052 |
| ============= | ============= | ============= | ============= | |
| Islamic financing and investing assets | ||||
| Loss allowance as at 1 January | ||||
| Transfers | 959 | 1,593 | 58,388 | 60,940 |
| Transfer from Stage 1 to Stage 2 | – | – | – | – |
| Transfer from Stage 1 to Stage 3 | -129 | 1,161 | – | 1,032 |
| Transfer from Stage 2 to Stage 1 | – | – | – | – |
| Transfer from Stage 2 to Stage 3 | 13 | -187 | – | -174 |
| Transfer from Stage 3 to Stage 1 | – | – | – | – |
| Transfer from Stage 3 to Stage 2 | – | – | – | – |
| New financial assets originated | – | – | – | – |
| Net remeasurement of loss allowance | – | – | – | – |
| Reversal of no longer required impairment charges | ( 437 ) | (1,235) | 743 | (929) |
| ———————— | ———————— | ———————— | ———————— | |
| Loss allowance as at 31 December 2020 | 406 | 1,332 | 59,131 | 60,869 |
| ============= | ============= | ============= | ============= | |
| 2019 | ||||
| Stage 1 | Stage 2 | Stage 3 | ||
| 12-month ECL | Lifetime ECL | Lifetime ECL | Total | |
| AED’000 | AED’000 | AED’000 | AED’000 | |
| Loans and advances | ||||
| Loss allowance as at 1 January | 21,556 | 17,942 | 312,147 | 351,645 |
| Transfers | ||||
| Transfer from Stage 1 to Stage 2 | (1,258) | 3,051 | – | 1,793 |
| Transfer from Stage 1 to Stage 3 | (1,549) | – | 32,913 | 31,364 |
| Transfer from Stage 2 to Stage 1 | 1,752 | (1,084) | – | 668 |
| Transfer from Stage 2 to Stage 3 | – | (4,809) | 15,069 | 10,260 |
| Transfer from Stage 3 to Stage 1 | 37 | – | (791) | (754) |
| Transfer from Stage 3 to Stage 2 | – | 222 | (1,036) | (814) |
| New financial assets originated | 3,865 | 1,234 | 2,640 | 7,739 |
| Net remeasurement of loss allowance | (5,608) | (850) | 26,235 | 19,777 |
| Reversal of no longer required impairment charges | (2,838) | (1,324) | (1,346) | (5,508) |
| ———————— | ———————— | ———————— | ———————— | |
| Loss allowance as at 31 December 2019 | 15,957 | 14,382 | 385,831 | 416,170 |
| ============= | ============= | ============= | ============= | |
| Islamic financing and investing assets | ||||
| Loss allowance as at 1 January | 1,975 | 1,163 | 56,603 | 59,741 |
| Transfers | ||||
| Transfer from Stage 1 to Stage 2 | (79) | 79 | – | – |
| Transfer from Stage 1 to Stage 3 | (461) | – | 461 | – |
| Transfer from Stage 2 to Stage 1 | 122 | (122) | – | – |
| Transfer from Stage 2 to Stage 3 | – | (962) | 962 | – |
| Transfer from Stage 3 to Stage 1 | ||||
| Transfer from Stage 3 to Stage 2 | – | 948 | (948) | – |
| New financial assets originated | – | – | – | – |
| Net remeasurement of loss allowance | (597) | 487 | 1,310 | 1,200 |
| Reversal of no longer required impairment charges | – | – | – | – |
| ———————- | ———————- | ———————- | ———————- | |
| Loss allowance as at 31 December 2019 | 960 | 1,593 | 58,388 | 60,941 |
| ============= | ============= | ============= | ============= | |
