Page 354 - Bank-Muamalat_Annual-Report-2023

BANK MUAMALAT MALAYSIA BERHAD

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

48. FAIR VALUE MEASUREMENTS (CONT’D.)
(b) Financial instruments not carried at fair value (cont’d.)

Fair value is the estimated amount at which a financial asset or liability can be exchanged between two (2) parties
under normal market conditions. However, for certain assets such as financing and deposits, the respective fair
values are not readily available as there is no open market where these instruments are traded. The fair values
for these instruments are estimated based on the assumptions depicted below. These methods are subjective
in nature, therefore, the fair values presented may not be indicative of the actual realisable value.

Fair value information has been disclosed for the Group’s and the Bank’s investments in equity instruments that are
carried at cost because fair value cannot be measured reliably. The Group and the Bank do not intend to dispose
of this investment in the foreseeable future.

Financing of customers
The fair values of financing of customers not designated as hedged item are estimated based on expected future
cash flows of contractual instalment payments, discounted at applicable and prevailing rates at reporting date
offered for similar facilities to new customers with similar credit profiles. In respect of non-performing financing,
the fair values are deemed to approximate the carrying values, which are net of individual assessment allowance
for bad and doubtful financing.
Deposits from customers

The fair values of deposits from customers with maturities of less than one year are estimated to approximate
their carrying values due to the relatively short maturity of these instruments. The fair values of deposits from
customers with remaining maturities of more than one year are estimated based on discounted cash flows
using applicable rates currently offered for deposits with similar remaining maturities.
Subordinated sukuk

The fair values of subordinated obligations are estimated by discounting the expected future cash flows using
the applicable prevailing profit rates for financing with similar risk profiles.

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