Page 212 - Bank-Muamalat_Annual-Report-2023

BANK MUAMALAT MALAYSIA BERHAD

NOTES TO THE
FINANCIAL STATEMENTS
31 DECEMBER 2023 (18 JAMADIL AKHIR 1445H)

2. MATERIAL ACCOUNTING POLICIES (CONT’D.)
2.2 Material accounting policy information (cont’d.)

(b) Financial assets (cont’d.)
(i) Initial recognition and subsequent measurement (cont’d.)

(1) Financial assets at amortised cost (cont’d.)
(ii) Business model assessment (cont’d.)
• The business model assessment is based on reasonably expected scenarios without taking
‘worst case’ or ‘stress case’ scenarios into account. If cash flows after initial recognition are
realised in a way that is different from the Group’s and the Bank’s original expectations,
the Group and the Bank do not change the classification of the remaining financial assets
held in that business model, but incorporate such information when assessing newly
originated or newly purchased financial assets going forward.

Included in financial assets at amortised cost are cash and short-term funds, cash and placements
with financial institutions, financial investments, financing of customers, statutory deposits and
a portion of other assets as disclosed in the respective notes to the financial statements.

(2) Financial assets at fair value through other comprehensive income (“FVOCI”)
The Group and the Bank apply the new category under MFRS 9 Financial Instruments of debt
instruments measured at FVOCI when both of the following conditions are met:
• The contractual terms of the financial assets meet the SPPP test; and

• The instrument is held within a business model, the objective of which is achieved by both collecting
contractual cash flows and selling financial assets.
Financial assets at FVOCI are subsequently measured at fair value with gains and losses arising
due to changes in fair value recognised in the Other Comprehensive Income (“OCI”). Profit income
and foreign exchange gains and losses are recognised in profit or loss in the same manner as
for financial assets measured at amortised cost. Where the Group and the Bank hold more than
one investment in the same security, they are deemed to be disposed off on a first–in-first–out
basis. Upon derecognition, cumulative gains or losses previously recognised in OCI are reclassified
from OCI to profit or loss.
Equity instruments are normally measured at FVTPL. However, for non-traded equity instruments,
with an irrevocable option at inception, the Group and the Bank measure the changes through
FVOCI (without recycling profit or loss upon derecognition).
Included in financial assets at FVOCI are certain equity and debt instruments.

(3) Financial assets at fair value through profit or loss (“FVTPL”)
Financial assets at FVTPL are those that are held-for-trading and have been either designated by the
Group and the Bank upon initial recognition or are mandatorily required to be measured at fair value
under MFRS 9 Financial Instruments.

210