Document ID: chunk:federal_register_of_legislation:F2022L00217:body:0:p9
Version: federal_register_of_legislation:F2022L00217
Segment Type: other
Provision Reference: 
Character Range: 27880–31215

secured by residential property).  Facilities of this nature should be reported under housing loans.

Stage 2                                   The impairment stage where provisions on exposures are calculated on a lifetime expected credit loss basis but are not credit impaired in accordance with AASB 9 Financial Instruments (AASB 9).

Term loans                                Means loans that have a fixed term.  Exclude loans to householders for the purpose of housing.

Unsecured                                 An exposure for which there is no associated security.

Well-secured                              An exposure for which the ADI judges that the fair value of associated security, discounted to allow for reasonable realisation costs, is sufficient to cover payment of principal and any accrued interest.

                                          Prescribed provisioning ADIs must refer to Attachment B of APS 220 for the purposes of defining well-secured when reporting.

Scope

The form covers the credit exposures, which ADIs hold, and is not limited to problem loans.

When calculating total exposures, the exposure should include:

     * claims and commitments recorded on-balance sheet; and

     * the credit equivalent amounts of off-balance sheet claims and commitments.

In measuring off balance sheet credit exposures the following measurement policies should be adopted:

     1. Include under exposures for the appropriate non-performing asset category, the following:

         * Any direct credit substitutes (e.g. guarantees, letters of credit and endorsed bills of exchange as described in the ADI Off Balance Sheet Business Form).  For example, where an ADI has guaranteed the financial obligations of a client, and there is reasonable doubt about the ultimate collectability of principal or interest, which the ADI has a contractual obligation to pay under the guarantee, it should be included in the appropriate non-performing asset category.

    2.             Any commitments, as described in the ADI Off Balance Sheet Business Form. For example, where there is reasonable doubt about the ultimate collectability of principal and interest relating to such commitments, or a provision established, then the balance of the outstanding commitment should be included in the appropriate non-performing asset category. Unless otherwise instructed report:

         * outstanding balances net of interest and other income not taken to profit, and net of any amounts written off;

         * all items without any adjustment for credit conversion factors (except for market related off balance sheet transactions), risk weights, provisions, and/or collateral arrangements; and

         * amounts net of offsetting balances available under legally eligible netting arrangements as outlined in Prudential Standard APS 112 Capital Adequacy: Standardised Approach to Credit Risk.

    3.             Total provisions should include all provisions measured in accordance with AASB 9.

    4.             Separately report amounts, where requested, recorded on Australian and overseas books.

Specific instructions

Refer to APS 220 Credit Risk Management (APS 220) when completing this form.

Section A: Credit Quality
Column 1  Report the total exposure for exposures recorded in