Affin Bank Berhad | Annual Report 2020

240 ORGANISATION EXECUTIVE SUMMARY CORPORATE GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION (A) BASIS OF PREPARATION (CONTINUED) Standards, amendments to published standards and interpretations that are effective (continued) (b) Additional measures to assist borrowers/customers affected by the covid-19 outbreak by BNM On 24 March 2020, BNM announced the additional measures to assist borrowers/customers experiencing temporary financial constraints due to the Covid-19 pandemic. The measures which are aimed at ensuring the financial intermediation function of the financial sector remains intact, access to financing continues to be available, and banking institutions remain focused on supporting the economy during these exceptional circumstances are set out as follows: (i) Banking institutions will grant an automatic moratorium on all loans/financing repayments/payments, both principal and interest (except for credit card balances) by individuals and Small & Medium Enterprises (‘SMEs’) borrowers/customers for a period of 6 months effective 1 April 2020. This automatic moratorium is applicable to any loans/financing that is not in arrears exceeding 90 days as at 1 April 2020 and denominated in Malaysian Ringgit; (ii) For credit card balances, banking institutions shall offer customers the option of converting their outstanding balances into a term loan/financing of a tenure of not more than 3 years with an effective interest/profit rate capped at 13% per annum. However, for customers who have not met the minimum repayment of 3 consecutive months, banking institutions shall automatically convert their credit card balances into term loans with the abovementioned terms; (iii) For corporate customers, banking institutions will facilitate customer’s requests for a moratorium on loan/financing repayment/payment, additional financing to support cash flows or may reschedule and restructure existing facilities in an effort to assist the corporations to preserve jobs and slowly resume economic activities when conditions improve; (iv) Banking institutions are given prudential buffer with immediate effect to drawdown the capital conservation buffer of 2.5%, to operate below the minimum liquidity coverage ratio of 100% and to reduce the regulatory reserves held against expected losses to 0%. This buffer will need to be restored to the minimum regulatory requirements by 30 September 2021; and (v) Banking institutions are also allowed to implement lower minimum Net Stable Funding Ratio (‘NSFR’) of 80% effective 1 July 2020. However, banking institutions will need to comply with 100% NSFR ratio from 30 September 2021. The financial impact of the moratorium is disclosed in Note 37. Standards, amendments to published standards and interpretations that are early adopted The Group and the Bank have early adopted the MFRS 16 amendment for the first time in its annual financial statements ended 31 December 2020, with the date of initial application of 1 January 2020. The amount recognised in the Group’s and the Bank’s 31 December 2020 profit or loss to reflect changes in lease payments that arise from rent concessions to which the Group and the Bank has applied the practical expedient is RM48,867. The lease liability is reduced by RM254,837. During the financial year, the Group and the Bank changed its accounting policies on Covid-19 Related Rent Concession upon early adoption of the MFRS 16 amendment. In accordance with the transitional provisions provided in the MFRS 16 amendment, the comparative information for 2019 was not restated and continued to be reported under the previous accounting policies in accordance with the lease modification principles in MFRS 16. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2020