Loans Receivable and Provision for Loan Losses. Loans receivable is generally stated in the amount of the outstanding principal balance. This is reduced by a provision for possible loan losses. Management first takes into account the overall portfolio quality in the context of various factors, including current economic conditions, in order to arrive at a general provision that appears adequate to reflect possible losses on the portfolio as a whole. In addition, specific provisions for loan losses can be determined for problem loans that may be likely to become uncollectible in the light of the borrowers' inability to service the debt, assessment of security held and the possible risk of further default.
Loans Receivable and Provision for Loan Losses. Loans receivable is generally stated in the amount of the outstanding principal balance. This is reduced by a provision for possible loan losses. Management first takes into account the overall portfolio quality in the context of various factors, including current economic conditions, in order to arrive at a general provision that appears adequate to reflect possible losses on the portfolio as a whole. In addition, specific provisions for loan losses can be determined for problem loans that may be likely to become uncollectible in the light of the borrowers' inability to service the debt, assessment of security held and the possible risk of further default. Loan loss provisions are generally effected through a charge to expenses at the end of the fiscal period.
Loans Receivable and Provision for Loan Losses. Loans are stated net of allowance for credit losses. The Bank reviews its individually significant loans and advances at each statement of financial position date to assess whether an impairment loss should be recorded in the statement of comprehensive income. Specific provisions for loan losses are determined for loans that are likely to become uncollectible in light of the borrowers' inability to repay the debt. The Bank assesses the security held in determining the provisions assigned. These estimates are based on assumptions about a number of factors and actual results may differ, resulting in future changes to the allowance.
