2.3 Foreign currency translation Functional and presentation currency
Items in the fi nancial statements of the Company and each of the Group’s subsidiaries are measured using the entities’
functional currency, being the currency of the primary economic environment in which the entity operates. The
fi nancial statements are presented in Singapore dollars, which is the Company’s functional and the Group’s presentation
currency.
Foreign currency transactions Transactions in foreign currencies are measured at the
exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are
translated into Singapore dollars at the exchange rate ruling at the balance sheet date. Foreign exchange differences arising
from this translation are recognised in the income statement. Non-monetary assets and liabilities measured at cost in a
foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities
measured at fair value in foreign currencies are translated into Singapore dollars at the exchange rate ruling at the date the
fair value was determined.
Unrealised foreign exchange differences arising from non- monetary fi nancial assets classifi ed as fair value through profi t
or loss are recognised in the income statement. For non- monetary fi nancial assets classifi ed as available-for-sale,
unrealised foreign exchange differences are recorded in other comprehensive income and accumulated in equity until the
assets are disposed of or become impaired.
Foreign operations The results and fi nancial position of the Group’s operations
whose functional currency is not Singapore dollars are translated into Singapore dollars in the following manner:
• Assets and liabilities are translated at the exchange rate
ruling at the balance sheet date; •
Income and expenses in the income statement are translated at an average exchange rate approximating the exchange
rates at the dates of the transactions; and •
All resulting exchange differences are recognised in other comprehensive income.
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. For acquisitions prior to 1 January 2005, the
foreign exchange rates at the dates of acquisition were used. Consolidation adjustments
On consolidation, foreign exchange differences arising from the translation of net investments in foreign entities, as well as any
borrowings and instruments designated as foreign currency hedges of such investments, are recognised in other
comprehensive income and accumulated under capital reserves in equity. When a foreign operation is disposed of, such
currency translation differences are recognised in the income statement as part of the gain or loss on disposal.
2.4 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to management who is
responsible for allocating resources and assessing performance of the operating segments. Segment revenue, segment profi ts,
segment assets and segment liabilities are also measured on a basis that is consistent with internal reporting.
The Group’s fi nancial businesses are organised into Consumer Private Banking, Institutional Banking, Treasury and Others. In
total, the Group has four reportable segments.
2.5 Revenue recognition
Net interest income Net interest income, being interest income less interest
expense, is recognised on a time-proportionate basis using the effective interest method. The effective interest rate is the rate
that discounts estimated future cash receipts or payments through the expected life of the fi nancial instrument or, when
appropriate, a shorter period to its carrying amount. The calculation includes signifi cant fees and transaction costs that
are integral to the effective interest rate, as well as premiums or discounts. No interest expense is accrued on the Group’s
structured investment deposits which are carried at fair value through profi t or loss.
When a receivable is impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated future
cash fl ow discounted at the original effective interest rate of the instrument. Interest earned on the recoverable amount is
recognised as interest income in the income statement.
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 recognised on the completion of a
transaction. 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.
Dividend income Dividend income is recognised when the right to receive
payment is established. Dividend income arising from held for trading fi nancial assets is recognised in “Net trading income”,
while that arising from available-for-sale fi nancial assets is recognised in “Net income from fi nancial investments”.
Rental income Rental income from operating leases on properties is
recognised on a straight-line basis over the lease term.
2.6 Cash and cash equivalents For the purposes of the cash fl ow statement, cash and cash