Page 191 - Bank-Muamalat-Annual-Report-2021

ANNUAL REPORT 2021 189
SUSTAINABILITY STATEMENT OUR GOVERNANCE OUR NUMBERS OTHER INFORMATION

2. sIGNIfIcANT AccOuNTING POLIcIes (cONT’D.)

2.3 summary of significant accounting policies (cont’d.)
(c) financial liabilities
(i) Date of recognition

All financial liabilities are initially recognised on the trade date, i.e. the date that the Group and the Bank
become a party to the contractual provision of the instruments.
(ii) Initial recognition and subsequent measurement

Financial liabilities are classified according to the substance of the contractual arrangements entered into
and the definitions of a financial liability.

Financial liabilities are classified as either financial liabilities at FVTPL or at amortised cost.
(1) financial liabilities at fvTPL

Financial liabilities at FVTPL include financial liabilities held-for-trading and financial liabilities designated
upon initial recognition as at FVTPL.

Financial liabilities held-for-trading include derivatives entered into by the Group and the Bank that do
not meet the hedge accounting criteria. Derivative liabilities are initially and subsequently measured
at fair value, with any resultant gains or losses recognised in statements of profit or loss. Net gains or
losses on derivatives include exchange differences.

(2) financial liabilities at amortised cost
The Group’s and the Bank’s financial liabilities at amortised cost include deposits from customers,
deposits and placements of banks and other financial institutions, debt securities, payables, bills and
acceptances payable, recourse obligation on financing sold to Cagamas and other liabilities.

(a) Deposits from customers, and deposits and placements of banks and other financial
institutions

Deposits from customers, and deposits and placements of banks and other financial institutions
are stated at placement values.
(b) Islamic debt securities

Issued Islamic debt securities are classified as financial liabilities or equity in accordance with the
substance of the contractual terms of the instruments. The Group’s and the Bank’s debt securities
consist of subordinated sukuk and senior sukuk.
These Islamic debt securities are classified as liabilities in the statement of financial position as
there is a contractual obligation by the Group and the Bank to make cash payments of either
principal or profit or both to holders of the debt securities and that the Group and the Bank are
contractually obliged to settle the financial instrument in cash or another financial instrument.
Subsequent to initial recognition, all issued Islamic debt securities are recognised at amortised
cost, with any difference between proceeds net of transaction costs and the redemption value
being recognised in the statement of profit or loss over the period of the financing on an effective
profit rate method.