Page 349 - Bank-Muamalat_Annual-Report-2023

ANNUAL REPORT 2023
OUR NUMBERS

48. FAIR VALUE MEASUREMENTS
(a) Financial instruments measured at fair value

Determination of fair value and the fair value hierarchy
Level 1 - Quoted (unadjusted) market prices in active markets for identical;

Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement either
directly (i.e. prices) or indirectly (i.e. derived from prices), observable; and
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is
unobservable.
Where such quoted and observable market prices are not available, fair values are determined using appropriate
valuation techniques, which include the use of mathematical models, such as discounted cash flow models and
option pricing models, comparison to similar instruments for which market observable prices exist and other
valuation techniques. The objective of valuation techniques is to arrive at a fair value determination that reflects
the price of the financial instruments at the reporting date, that would have been determined by market participants
acting at arm’s length. Valuation techniques used incorporate assumptions regarding discount rates, profit rate yield
curves, estimates of future cash flows and other factors. Changes in these assumptions could materially affect the
fair values derived. The Group and the Bank generally uses widely recognised valuation techniques with market
observable inputs for the determination of fair value, which require minimal Management’s judgement and estimation,
due to the low complexity of the financial instruments held.
The following table shows the financial instruments which are measured at fair value at the reporting date analysed
by the various level within the fair value hierarchy:

Valuation technique using;
Quoted Observable Unobservable
Market Price Inputs Inputs
Group Level 1 Level 2 Level 3 Total
2023 RM’000 RM’000 RM’000 RM’000

Financial assets
Financial investments designated at fair value
through profit or loss 6,585 5,112 22,010 33,707
Financial investments at FVOCI 75,381 6,322,200 107,885 6,505,466
Derivative financial assets - 12,819 - 12,819
Total financial assets measured at fair value 81,966 6,340,131 129,895 6,551,992

Financial liabilities
Derivative financial liabilities - 21,519 - 21,519
Total financial liabilities measured at fair value - 21,519 - 21,519

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