2005 - Asianbanks.net

3.8 Allowance for doubtful accounts
(a)
(b)
For loans of banking business
The Bank provides allowance for doubtful accounts for debtors in accordance with the notifications of the Bank of Thailand.
The criteria for loan loss provisioning as determined by the Bank of Thailand include loan classification criteria, loan loss
provisioning rates for each loan class, valuation of collateral to be used in determining allowance for doubtful debts, and criteria for
reclassification of restructured loans to “pass” loan classification.
Allowance for doubtful accounts additionally set up during the years is included in expenses for the years.
Amounts written off as bad debts are deducted from the allowance for doubtful accounts and in case of recovery being made
from bad debtors, the recovered amount is recognized as income in statements of earnings in the year it is recovered.
For securities business receivables
A subsidiary provides allowance for doubtful debts based on a review of the debtor’s ability to make repayment, taking into
consideration recovery risk and the value of the collateral. Allowance is set aside for doubtful debts not fully covered by collateral
and/or those expected not to be fully recoverable. Debt classifications and provisions are made in accordance with the guidelines
laid down in the Notification No. Kor. Thor. 33/2543, dated 25 August 2000, as amended by the Notification No. Kor. Thor. 5/2544,
dated 15 February 2001, of the Office of the Securities and Exchange Commission, and consideration of other relevant factors.
3.9 Troubled debt restructuring and losses from troubled debt restructuring
The Bank records troubled debt restructuring transactions and relevant losses with reference to the notifications of the Bank of
Thailand.
In determination of losses from troubled debt restructuring, in cases where the troubled debt restructuring involves debts/assets
swap and/or debt/equity swap the Bank recognizes a loss from troubled debt restructuring in the statements of earnings equal to the
excess of the recorded outstanding loan and receivable balances due from a debtor over the fair value of assets and/or equity received
in settlement of debts. In cases where the troubled debt restructuring involves modification of the repayment conditions, the Bank will
determine the present value of expected future cash flows to be received in accordance with the new restructuring agreement,
discounted by the market interest rate being quoted on the restructuring date. The excess of the recorded outstanding loans and
receivables due from a debtor over the then-determined present value is accounted for as revaluation allowance for debt restructuring
and recognize as loss from troubled debt restructuring in the statements of earnings on the debt restructuring date. The Bank amortizes
revaluation allowance for debt restructuring based on the repayment amounts and the remainder of the restructuring periods.
3.10 Properties foreclosed
Properties foreclosed are stated at the lower of cost or net realizable value, which is determined with reference to the latest
available appraisal value, in accordance with the notifications of the Bank of Thailand, less estimated selling expenses.
Gains or losses on disposal of properties foreclosed are recorded as income or expenses when ownership is transferred.
Impairment loss is recognized in the statements of earnings.
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