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## Risk Management Report continued 

## Loan impairment review 

All exposures are subject to recurring review and assessment for possible impairment. Provisions for loan losses are based on an incurred loss model that recognises a provision where there is objective evidence of impairment at each balance date, and is calculated based on the discounted values of expected future cash flows. 

Specific provisions are recognised where specific impairment is identified. The rest of the loans are placed into pools of assets with similar risk profiles and collectively assessed for losses that have been incurred but not yet identified. 

Impaired assets continue to decline from the past year, driven by a combination of write-backs, write-downs and foreign currency movements. 

## Ratio of provisions and impaired assets to loans, advances and leases 

<img src='content_image/270064.jpg'>

## Notes: 

— Loan assets exclude securitised mortgages, securitised Macquarie Capital loans/leases, segregated future funds and receivables in the form of fees. 

— Net impaired assets and net losses exclude investment securities. 

— Collective provision (as per Note 11 of the Financial Report) is intended to cover losses inherent in the existing overall credit portfolio that are not yet specifically identifiable. 

— Net credit losses represent total profit and loss impact in the stated period due to additional specific provisions and direct write-offs net of any write-backs. 

— Please refer to Note 12 of the Financial Report for further information on impaired assets. 

