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
equivalents comprise cash on hand and non-restricted balances with central banks which are readily convertible into cash.
2.7 Financial assets
Financial assets are classifi ed according to the purpose for which the assets were acquired. Management determines the
classifi cation at initial recognition.
The classifi cation of fi nancial assets is as follows:
a Financial assets at fair value through profi t or loss are
either acquired for the purpose of short-term selling held for trading or designated by management on initial
recognition designated under the fair value option.
Derivatives are classifi ed as held for trading unless they are designated as hedging instruments. The specifi c Group
accounting policy on derivatives is detailed in Note 2.15.
Financial assets designated under the fair value option meet at least one of the following criteria upon designation:
• it eliminates or signifi cantly reduces measurement or
recognition inconsistencies that would otherwise arise from measuring fi nancial assets, or recognising gains or
losses on them, using different bases; or
• the fi nancial asset contains an embedded derivative that
would otherwise need to be separately recorded.
b Financial assets classifi ed as loans and receivables are
non-derivative fi nancial assets with fi xed or determinable payments that are not quoted in an active market, other
than:
• those that the Group intends to sell immediately or in the
short term, which are classifi ed as held for trading, or those that the entity upon initial recognition designates
as at fair value through profi t or loss; or
• those that the Group upon initial recognition designates
as available-for-sale.
c Financial assets classifi ed as available-for-sale are
non-derivatives that are either designated in this category or not classifi ed in any other categories. These fi nancial
assets are intended to be held for an indefi nite period of time, and may be sold in response to needs for liquidity or
changes in interest rates, exchange rates or equity prices.
Recognition and derecognition Purchases and sales of fi nancial assets are recognised on the
date that the Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive
cash fl ows from the fi nancial assets have expired or have been transferred and the Group has transferred substantially all risks
and rewards of ownership.
Reclassifi cation of fi nancial assets Non-derivative fi nancial assets may be reclassifi ed out of the
fair value through profi t or loss and available-for- sale categories in particular circumstances:
• fi nancial assets that would meet the defi nition of loans and
receivables may be classifi ed out of the fair value through profi t or loss and available-for-sale categories if the Group
has the intention and ability to hold these fi nancial assets for the foreseeable future or until maturity; and
• fi nancial assets except fi nancial assets that would have met
the defi nition of loans and receivables may be reclassifi ed out of the fair value through profi t or loss category in rare
circumstances.
Reclassifi cations are made at fair value as of the reclassifi cation date. The fair value becomes the new cost or amortised cost as
applicable. Any gain or loss already recognised in the income statement before the reclassifi cation date is not reversed.
Initial measurement Financial assets are initially recognised at fair value plus
transaction costs except for fi nancial assets at fair value through profi t or loss, for which transaction costs are expensed
off immediately. The fair value of a fi nancial asset on initial recognition is usually the transaction price.
Subsequent measurement Financial assets at fair value through profi t or loss and available-
for-sale fi nancial assets are subsequently carried at fair value. Loans and receivables are carried at amortised cost using the
effective interest method. Unquoted equity investments classifi ed as available-for-sale for which fair values cannot be
reliably determined are carried at cost, less impairment.
DBS GROUP HOLDINGS LTD ITS SUBSIDIARIES
Realised or unrealised gains or losses on fi nancial assets held for trading and fi nancial assets designated under the fair value
option, except interest income, are taken to “Net trading income” and “Net income from fi nancial instruments
designated at fair value” respectively in the income statement in the period they arise. Unrealised gains or losses arising from
changes in fair value of fi nancial assets classifi ed as available- for-sale are recognised in other comprehensive income and
accumulated in available-for-sale revaluation reserves. When fi nancial assets classifi ed as available-for-sale are sold or
impaired, the accumulated fair value adjustments in the available-for-sale revaluation reserves are reclassifi ed to profi t
or loss.
Determination of fair value The fair values of fi nancial instruments traded in active markets
such as exchange-traded and over-the-counter securities and derivatives are based on quoted market prices at the balance
sheet date. The quoted market prices used for fi nancial assets held by the Group are the current bid prices. If the market for a
fi nancial asset is not active, the Group establishes fair value by using valuation techniques. These include the use of recent
arm’s length transactions, reference to other instruments that are substantially the same, discounted cash fl ow analysis and
option pricing models. Where applicable, a valuation reserve or pricing adjustment is applied to arrive at the fair value.
2.8 Impairment of fi nancial assets The Group assesses at each balance sheet date whether there is
