CITIC Limited Half-Year Report 2020

97 CITIC Limited Half-Year Report 2020 For the six months ended 30 June 2020 Notes to the Consolidated Financial Statements 29 Financial risk management and fair values (continued) (a) Credit risk (continued) Measurement of the expected credit losses (“ECL”) (continued) (2) Definition of default and credit-impaired assets When credit impairment occurred, the Group defines that the financial asset is in default. In general, a financial asset that is overdue for more than 90 days is considered to be in default. When one or more events that adversely affect the expected future cash flow of a financial asset occurs, the financial asset becomes a credit-impaired financial asset. Evidence of credit-impaired financial assets includes the following observable information: – The issuer or borrower/debtor is in significant financial difficulties; – The borrower/debtor is in breach of financial covenant(s) such as default or overdue in repayment of interests or principal etc; – The creditor gives the debtor concession that would not be offered otherwise, considering economic or contractual factors relating to the debtor’s financial difficulties; – It is becoming probably that the borrower/debtor will enter bankruptcy or other debt restructuring; – An active market for that financial asset has disappeared because of financial difficulties from issuer or borrower/debtor; – Financial assets are purchased or originated at a deep discount that reflects the incurred credit losses. The Group’s default definition has been consistently applied to the modeling of default probability, default risk exposure and default loss rate in the Group’s expected credit loss calculation process.