4.9 Financial guarantee contracts and loan commitments

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Financial guarantee contracts and loan commitments

Financial guarantees are contracts that require the Group to make specified payments to reimburse the holders for a loss they incur because a specified debtor fails to make payment when due, in accordance with the terms of a debt instrument. Loan commitments are irrevocable commitments to provide credit under pre-specified terms and conditions.

Financial guarantee contracts are initially measured at fair value and subsequently measured at the higher of:

  • The amount of the loss allowance; and
  • The premium received on initial recognition less income recognized in accordance with the principles of IFRS 15.

Loan commitments provided by the Group are measured as the amount of the loss allowance calculated as described in Note 5 (b).




*Restricted cash represents deposits with insurance authority amounting to AED 6,000 thousand (2017: AED 6,000 thousand).

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