5.5.1. Impairment
Impairment of financial instruments to customers, expected credit losses
With regard to all financial assets that are measured at amortised cost or at fair value through other comprehensive income and off-balance sheet liabilities, i.e. financial guarantees or loan commitments, the Group creates the allowance according to IFRS 9 based on the expected credit losses and taking into account forecasts and expected future economic conditions in the context of credit risk.
The process of estimating expected credit losses requires the use of significant estimates, in particular in the area of:
- assumptions regarding macroeconomic forecasts and possible scenarios how these forecasts will develop in the future,
- possible expert adjustments in relations to industries where the Group identifies an increased risk, and the models used do not fully reflect the risks of these industries,
- rules (thresholds) for identifying a significant increase in credit risk.
More information on the principles applied by the Group for determining expected credit losses and the significant assumptions applied in this area are presented in the Note 46.2.