Explain why the collective gross carrying amount loans receivable has increased so significantly compared against the increase in the ECL amount

​The significant increase in the collective gross carrying amount of loans receivable compared to the increase in the Expected Credit Loss (ECL) amount can be attributed to several factors:

1. Growth in Loan Portfolio: The primary reason could be a substantial growth in the loan portfolio. More loans mean a higher gross carrying amount. If the institution has been successful in acquiring new customers or expanding its loan products, this would lead to an increase in the total value of loans given out.

2. Improved Credit Quality: An increase in the quality of borrowers could lead to a lower relative increase in ECL. If the financial institution has tightened its credit policies and is lending to more creditworthy borrowers, the likelihood of default decreases. This means that even with a larger loan book, the expected credit losses might not increase proportionately.

3. Economic Conditions: The macroeconomic environment plays a crucial role. In a growing economy with low unemployment rates and stable financial markets, the risk of loan defaults decreases. This could mean that despite a significant increase in the gross carrying amount, the ECL does not rise equivalently if the economic outlook is positive.

4. Changes in ECL Calculation Methodology: If there have been changes in how the ECL is calculated, such as changes in the parameters or models used to estimate credit losses, it could result in a lower increase in ECL relative to the increase in loans. For instance, if the institution adopted more sophisticated risk assessment tools, it might find that its previous ECL estimates were overly conservative.

5. Recoveries and Write-offs: The ECL amount could be offset by recoveries on previously written-off loans or a higher rate of write-offs, which would reduce the amount of ECL required to be recognized.

6. Regulatory Changes: Sometimes, changes in accounting standards or regulatory requirements can affect how ECL is calculated or reported, leading to disparities between the growth in loan amounts and ECL.

7. Portfolio Diversification: Diversifying the loan portfolio across different sectors, geographies, and types of borrowers can reduce the risk profile of the overall portfolio, leading to a relatively smaller increase in ECL compared to the growth in gross loans.

It’s important to note that the relationship between the gross carrying amount of loans and ECL is not linear and can be influenced by a variety of internal and external factors. For a detailed analysis, specific data and context from the financial institution in question would be necessary.