Page 125 - Exim iar24_Ebook

EXIM BANK MALAYSIA ANNUAL REPORT 2024

7 FINANCIAL STATEMENTS 123
NOTES TO THE FINANCIAL STATEMENTS

2. MATERIAL ACCOUNTING POLICY INFORMATION (cont’d)

2.4 Summary of material accounting policy information (cont’d)
(e) Impairment of non-financial assets (cont’d)

An assessment is made at each reporting date as to whether there is any indication that previously recognised
impairment losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed
only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last
impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable
amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation,
had no impairment loss been recognised previously. Such reversal is recognised in the statement of profit or loss
unless the asset is measured at revalued amount, in which case reversal is treated as revaluation increase.
(f) Financial assets

Financial asset are recognised in the statements of financial position when, and only when, the Group and the Bank
become a party to the contractual provisions of the financial instrument.
Initial recognition and measurement

Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, Fair Value
through Other Comprehensive Income (“FVOCI”) and Fair Value through Profit or Loss (“FVTPL”).

The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow
characteristics and the Group’s and the Bank’s business model for managing them. With the exception of loans,
advances and financing that do not contain a significant financing component or for which the Group and the Bank
have applied the practical expedient, the Group and the Bank initially measure a financial asset at its fair value plus,
in the case of a financial asset not at FVTPL, transaction costs.
In order for a financial asset to be classified and measured at amortised cost or FVOCI, it needs to give rise to
cash flows that are ‘solely payments of principal and interests (“SPPI”) on the principal amount outstanding.
This assessment is referred to as the SPPI test and is performed at an instrument level.
Business Model assessments

The Group and the Bank determine its business model at the level that best reflect how it manages groups of
financial assets to achieve its business objective.

The Group and the Bank holds financial asset to generate returns and provide a capital base to provide for
settlement of claims as they arise. The Group and the Bank considers the timing, amount and volatility of cash
flow requirements to support insurance liability portfolios in determining the business model for the assets as well
as the potential to maximise return for shareholders and future business development.
The Group and the Bank business model is not assessed on an instrument-by-instrument basis, but a higher level
of aggregated portfolios that is based on observable factors and is determined by the key management personnel
on the basis of both:
- The way that assets are managed and their performance is reported to them; and
- The contractual cash flow characteristics of the financial asset.
The expected frequency, value and timing of asset sales are also important aspects of the Group’s and the Bank’s
assessment. The Group and the Bank assess its business models at each reporting period in order to determine
whether the models have changed since the preceding period.