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2.13 Properties and other fixed assets
Properties including investment properties and other fixed assets are stated at cost less accumulated depreciation and
impairment losses.
Depreciation is calculated using the straight-line method over the estimated useful lives of the assets.
Generally, the useful lives are as follows: Buildings
50 years or over the remaining lease period, whichever is shorter.
Leasehold land 100 years or over the remaining
lease period, whichever is shorter. Leasehold land where the unexpired
lease period is more than 100 years is not depreciated.
Computer software 3 – 5 years
Office equipment, 5 – 10 years
furniture and fittings Please refer to Note 25 for the details of properties and other
fixed assets and their movements during the year.
2.14 Financial liabilities
Initial recognition, classification and subsequent measurement Financial liabilities are initially recognised at fair value. The Group
generally classifies and measures its financial liabilities in accordance with the purpose for which the financial liabilities are incurred and
managed. Accordingly:
financial liabilities at fair value through profit or loss if they are incurred for the purpose
of repurchasing in the near term “
held for trading”, and
this may include debt securities issued and short positions in securities for the purpose of ongoing market-making or trading.
Financial liabilities at fair value through profit or loss can also be designated by management on initial recognition “
designated at fair value through profit or loss” if doing so eliminates or
significantly reduces measurement or recognition inconsistencies that would otherwise arise, or if the financial liability contains an
embedded derivative that would otherwise need to be separately recorded. Financial liabilities in this classification are usually within
the “Treasury” segment.
Realised or unrealised gains or losses on financial liabilities held for trading and financial liabilities designated under the fair
value option, except interest expense, are taken to “Net trading income” in the income statement in the period they arise. Interest
expense on structured investment deposits at fair value through profit or loss is also presented together with other fair value
changes in “Net trading income”.
Please refer to Note 2.8 for the accounting policy on derivatives.
amortised cost using
the effective interest method. These comprise predominantly the Group’s “Deposits and balances from customers”, “Due to
banks” and “Other debt securities”.
Please refer to Note 14 for further details on the types of financial liabilities classified and measured as above.
Determination of fair value The fair value of financial liabilities is the price that would be paid
to transfer the liability in an orderly transaction between market participants at the measurement date.
Please refer also to Note 39 for further fair value disclosures.
Derecognition A financial liability is derecognised from the balance sheet when
the obligation specified in the contract is discharged, cancelled or expired.
2.15 Loan commitments, letters of credit and
financial guarantees
Loan commitments Loan commitments are typically not financial instruments and are not
recognised on the balance sheet. They are disclosed in accordance with FRS 37 and form part of the disclosures in Note 35. Upon a loan
draw-down, the amount of the loan is accounted for under “loans and receivables” as described in Note 2.8.
Letters of credit Letters of credit are recorded off-balance sheet as contingent
liabilities upon issuance, and the corresponding payables to the beneficiaries and receivables from the applicants are recognised
on balance sheet upon acceptance of the underlying documents.
Financial guarantees A financial guarantee is initially recognised in the financial
statements at fair value on the date the guarantee is given. This is generally the amount fee paid by the counterparty. Subsequently,
the fee is recognised over time as income in accordance with the principles in Note 2.7.
Off-balance sheet credit exposures are managed for credit risk in the same manner as financial assets.
Please refer to Note 2.10 on the Group’s accounting policies on allowances for credit losses.
2.16 Provisions and other liabilities
Provisions for other liabilities of uncertain timing and amounts are recognised when:
as a result of past events;
benefits will be required to settle the obligation; and
The amount recognised as a provision is the best estimate of the
expenditure required to settle the present obligation at the balance sheet date.
2.17 Share capital and other instruments
classified as equity
Ordinary shares, preference shares and other instruments which do not result in the Group having a contractual obligation to deliver
cash or another financial asset, or to exchange financial assets or financial liabilities with the holder under conditions that are potentially
unfavourable to the Group, are classified as equity. Distributions arising from such instruments are recognised in equity as there is
no contractual obligation to pay distributions on these instruments. Incremental external costs directly attributable to the issuance of such
instruments are accounted for as a deduction from equity.
Financial statements 125
When any entity within the Group purchases the Company’s ordinary shares “treasury shares”, the consideration paid, including any
directly attributable incremental cost is presented as a component within equity, until they are cancelled, sold or reissued.
When treasury shares are subsequently cancelled, the cost of the treasury shares is deducted against either the share capital account
or retained earnings. When treasury shares are subsequently sold or reissued, any realised gain or loss on sale or reissue, net of any
directly attributable incremental transaction costs and related income tax, is recognised in capital reserves.
For ordinary and preference shares, interim dividends are recorded during the financial year in which they are declared payable.
Final dividends are recorded during the financial year in which the dividends are approved by the shareholders at the Annual
General Meeting.
D Other Specific Topics
2.18 Hedging and hedge accounting
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