The provision for impairment of loans pledged by enterprise policy holders (insurance) is also accounted for in this account.
The provision for impairment of enterprise pledged loans and mortgage loans (pawns) is also accounted for in this account.
The provision for impairment of loans issued by other institutions by entrusted banks or other financial institutions can be changed to the subject of "1304 entrusted loan loss provision".
The loan loss reserve accrued by the Bank in the current period is the difference between the book value of the loan at the end of the period and the present value of the estimated future recoverable amount. When calculating the present value of the estimated future cash flow of the loan, the following principles should be followed:
(1) For all important loans with objective evidence of impairment, the Bank calculates the present value of expected future cash flow item by item (discounted according to the original actual interest rate of all important loans, or discounted according to the current actual interest rate determined in the contract if the loan interest rate is variable; The same below).
(2) For immaterial loans with objective evidence of impairment, the Bank can calculate the present value of estimated future cash flows item by item or in combination.
(3) All loans without objective evidence of impairment, whether important or not, should be combined according to similar credit risk characteristics to judge whether there is impairment. If there is objective evidence of portfolio impairment, the present value of expected future cash flow should be calculated for the portfolio. Loans with loan loss reserves separately or in combination should not be included in such loan portfolios for impairment testing.