Follow the principles

The loan loss reserve calculated 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 showing impairment, the Bank shall calculate the present value of expected future cash flow item by item (discounted according to the original real interest rate of all important loans, or discounted according to the current real interest rate determined according to the contract if the loan interest rate is variable; The same below).

(2) For unimportant loans with objective evidence of impairment, banks can calculate the present value of expected future cash flows item by item or in combination.

(3) All loans without evidence of customer impairment, whether important or not, should be combined according to similar credit risk characteristics to determine whether they are impaired. If there is objective evidence of portfolio impairment, the present value of the estimated future cash flow of the portfolio should be calculated. Loans with separate or combined loan loss reserves should no longer be included in such loan portfolios for impairment testing.

Matters needing attention

When withdrawing the loan loss reserve, debit the account of "asset impairment loss-loan loss reserve" and credit this account. If the loan loss reserve that should be accrued in this period is greater than its book balance, the impairment reserve should be supplemented according to the difference, and the account of "Asset Impairment Loss-Loan Loss Reserve" should be debited and credited to this account.

For loans that are truly irrecoverable, when they are approved as bad debt losses, the withdrawn loan loss reserves shall be written off, debited to this account, and credited to "customer loans", "discount" and other subjects.

If the written-off loan loss reserve is recovered later, the subjects such as "customer loan" and "discount" shall be debited according to the actual recovered amount and credited to this account; At the same time, debit "company deposit" and "personal deposit" and credit "customer loan" and "discount".

Once the loan loss reserve is confirmed, it shall not be reversed.

The loan loss reserve should be accounted for separately. On the balance sheet, assets with loan loss provision should be reflected by the amount after deducting loan loss provision from assets. The loan loss provision accrued shall be reflected separately in the schedule of asset impairment provision.

This course should be detailed accounting according to the types of loan loss reserve.

The ending credit balance of this course reflects the bank's loan loss reserve balance.