Page 127 - Exim iar24_Ebook

EXIM BANK MALAYSIA ANNUAL REPORT 2024

7 FINANCIAL STATEMENTS 125
NOTES TO THE FINANCIAL STATEMENTS

2. MATERIAL ACCOUNTING POLICY INFORMATION (cont’d)

2.4 Summary of material accounting policy information (cont’d)
(f) Financial assets (cont’d)

(iii) Financial assets designated at FVOCI
Upon initial recognition, the Group and the Bank can elect to classify irrevocably its equity investments as
equity instruments designated at FVOCI when they meet the definition of equity under MFRS 9.

Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognised as
other income in the statement of profit or loss when the right of payment has been established, except when
the Group and the Bank benefit from such proceeds as a recovery of part of the cost of the financial asset,
in which case, such gains are recorded in OCI. Equity instruments designated at FVOCI are not subject to
impairment assessment.

(iv) Financial assets at FVTPL
Financial assets at FVTPL include financial assets held for trading, financial assets designated upon initial
recognition at FVTPL, or financial assets mandatorily required to be measured at fair value. Financial assets
are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term.
Derivatives, including separated embedded derivatives, are also classified as held for trading unless they
are designated as effective hedging instruments. Financial assets with cash flows that are not solely
payments of principal and interest are classified and measured at FVTPL, irrespective of the business model.
Notwithstanding the criteria for debt instruments to be classified at amortised cost or at FVOCI, as described
above, debt instruments may be designated at FVTPL on initial recognition if doing so eliminates, or significantly
reduces, an accounting mismatch.
Financial assets at FVTPL are carried in the statements of financial position at fair value with net changes in
fair value recognised in the statement of profit or loss.
(v) Financing and receivables

Financing and receivables consist of Murabahah, Tawarruq, Ijarah, Istisna’, Bai’ Al Dayn and Kafalah. These
contracts are recognised at amortised cost (except for Kafalah contracts), including direct and incremental
transaction costs using the effective profit method. These contracts are stated net of unearned income and
any amounts written off and/or impaired.
Definition of Shariah concept:
(a) Murabahah: Sale of an asset by the Bank to the customer at cost plus a mark-up in which the profit rate
has to be disclosed to the customer. The Sale Price is payable by the customer on deferred terms.
(b) Tawarruq: An arrangement that involves sale of commodity by the Bank to the customer in which the Sale
Price is payable on a deferred basis and subsequent sale of the commodity to a third party on a cash basis
to obtain cash.
(c) Ijarah: A lease contract to transfer the usufruct (benefits) of a particular property of the Bank to the
customer in exchange for a rental payment for a specified period.
(d) Istisna’: An agreement to sell to the customer a non-existent asset that is to be manufactured or built
according to the agreed specifications and delivered on a specified future date at a predetermined selling
price.