Assessing ECL Rates
Valtech Valuation Team recently conducted an assessment of the expected credit loss rates associated with financial guarantee liabilities on an aggregate loan portfolio basis. These liabilities originate from guarantees covering the potential default of loans from financial institutions.
The underlying loans, as assessed by Valtech Valuation Team, primarily pertain to qualified individuals, making them personal loans. To understand the credit loss dynamics, we conducted research on loans and advances to customers across various banks, aiming to mirror the nature of the underlying loans. Our analysis involved examining the annual reports of 40 banks domiciled in both the People’s Republic of China (PRC) and Hong Kong, all of which are listed on the Stock Exchange of Hong Kong. From this data, we extracted the corresponding expected credit loss figures across different stages.
Our research revealed that the stage credit losses for loans and advances to customers exhibit uniform patterns across these banks. Leveraging this insight, we applied average expected credit loss rates to the subject guarantee portfolio. Subsequently, our findings underwent rigorous auditor’s review for financial reporting purpose.
About Valtech Valuation
Valtech Valuation is a professional valuation firm accredited with ISO-9001 in valuation advisory services. The firm is renowned for its expertise in advanced valuation techniques, customized valuation models, data-driven insights, and adherence to compliance and reporting standards. The firm has a solid track record in valuation advisory for listed companies, private equity, fund managers, and financial institutions. Valtech’s qualified team comprises members with PhDs, CPA (HKICPA), CFA, Chartered Valuation Surveyors of the Royal Institution of Chartered Surveyors, and valuers accredited with Business Valuation (ABV) by AICPA and CVA qualifications in Singapore. Valtech continues to expand into more markets by leveraging its valuation platform and recruiting local experts.
