2 Allowance for expected credit loss for loans to customers For disclosures related to credit risk, loans to customers and allowance for expected credit loss for loans to customers, refer to notes 5, 6, 15 and 16 to the financial statements. The key audit matter How the matter was addressed in the audit As at 31 December 2021, loans to customers represented 78.43% and 78.59% of the total assets of consolidated and the Bank only, respectively, against which allowances for expected credit losses (“ECL”) of Baht 54,472 million and Baht 54,452 million, respectively were provided. Management’s estimation of ECL on loans to customers measured at amortised cost is based on credit models which are dependent on significant management judgements and estimates including selection of model, the use of forward-looking macroeconomic forecast, establishing the criteria for determining whether credit risk has increased significantly since initial recognition and consideration for post model adjustments. In particular, the ongoing economic situation and relief program provided to the customers resulting from COVID-19 adds further complexity to management’s estimation process especially for consideration of post model adjustments. Accordingly, it is considered a Key Audit Matter. In planning my audit procedures I performed a risk assessment by considering internal and external factors which could affect the performance of individual customers, industry sectors or customer segments, or other factors which could influence the judgments and estimates. I inspected of the Group and the Bank accounting policies and credit risk policy to determine whether this has been set up in accordance with the requirements of TFRS 9, the relevant Bank of Thailand notification and guidance. My audit procedures included testing the design and operating effectiveness of controls over credit review, model monitoring, forward-looking macroeconomic forecast and, post model adjustments. I sampled loans as identified in my risk assessment to perform credit review procedures, including a detailed review of the individual credit profile and other relevant information, from which I formed my own independent assessment. Selected key technical decisions, assumptions and model methodologies were tested, where appropriate, including involvement of my own credit risk specialists to inspect model documentation, model validation report performed by expert engaged by the Group and the Bank’s management and back-testing results. The selected models were also reperformed by the credit risk specialists. I and my credit specialist assessed assumptions and methodology used by the management in the identification and estimation of post model adjustments. I assessed whether the financial statement disclosures are adequate and appropriately reflect the Bank and its subsidiaries’ exposures to credit risk. 246 TMBThanachart Bank Public Company Limited
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