128 | DBS Annual Report 2016
Subsidiaries and branches
The results and financial position of subsidiaries and branches whose functional currency is not Singapore dollars “foreign operations”
are translated into Singapore dollars in the following manner:
• Assets and liabilities are translated at the exchange rates at the
balance sheet date; •
Income and expenses in the income statement are translated at exchange rates prevailing at each month-end, approximating the
exchange rates at the dates of the transactions; and •
All resulting exchange differences are recognised in other comprehensive income and accumulated under capital reserves
in equity. When a foreign operation is partially or fully disposed of, or when share capital is repaid, such exchange differences are
recognised in the income statement as part of the gain or loss when share capital is repaid.
For acquisitions prior to 1 January 2005, the foreign exchange rates at the respective dates of acquisition were used. Please refer to Note
27 for an overview of goodwill recorded. Goodwill and fair value adjustments arising on the acquisition of a foreign operation on or
after 1 January 2005 are treated as assets and liabilities of the foreign operation and translated at the closing rate.
2.7 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to management.
In preparing the segment information, amounts for each business segment are shown after the allocation of certain centralised costs,
funding income and the application of transfer pricing, where appropriate. Transactions between segments are recorded within
the segment as if they are third party transactions and are eliminated on consolidation.
Please refer to Note 44 for further details on business and geographical segment reporting.
B Income Statement
2.8 Income recognition
Interest income and interest expense
Interest income and interest expense as presented in Note 4 arise from all interest-bearing financial assets and financial liabilities regardless of
their classification and measurement, with the exception of the Group’s structured investment deposits which are carried at fair value through
profit or loss. Interest expense on such structured investment deposits is presented together with other fair value changes in trading income.
Interest income and interest expense are recognised on a time- proportionate basis using the effective interest method. The calculation
includes significant fees and transaction costs that are integral to the effective interest rate, as well as premiums or discounts.
Fee and commission income
The Group earns fee and commission income from a diverse range of products and services provided to its customers.
Fee and commission income is generally recognised on the completion of a transaction. Such fees include underwriting fees, brokerage fees,
bancassurance sales commission and variable service fees and fees related to completion of corporate finance transactions.
For a service that is provided over a period of time, fee and commission income is recognised over the period during which the related service is
provided or credit risk is undertaken. Such fees include the income from issuance of financial guarantees and bancassurance fixed service fees.
Fee and commission income is recorded net of expenses directly related to it. These expenses typically include brokerage fees paid,
card-related expenses and sales commissions, but do not include expenses for services delivered over a period such as service contracts
and other expenses that are not specifically related to fee and commission income transactions.
Dividend income
Dividend income is recognised when the right to receive payment is established. This is generally the ex-dividend date for listed equity
securities, and the date when shareholders approve the dividend for unlisted equity securities. Dividend income arising from held-for-
trading financial assets is recognised in “Net trading income”, while those arising from available-for-sale financial assets is recognised
in “Net income from investment securities”.
Allowances for credit and other losses
Please refer to Note 2.11 for the accounting policy on impairment of financial assets.
C Balance Sheet
2.9 Financial assets
