Cash and cash equivalents Impairment of financial assets
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Financial statements
Realised or unrealised gains or losses on such financial assets, except interest income, are taken to “Net trading income” in the income
statement in the period they arise. Derivatives including derivatives embedded in other contracts but
separated for accounting purposes are also categorised as held
for trading unless they are designated as hedging instruments in accordance with Note 2.19. Derivatives are classified as assets
when the fair value is positive and as liabilities when the fair value is negative. Changes in the fair value of derivatives other than those
designated as hedging instruments in cash flow or net investment hedges are included in “Net trading income”.
• Non-derivative financial assets that the Group intends to hold to
maturity are classified as
held to maturity. These are Singapore
Government securities that the Group holds for satisfying regulatory liquidity requirements and are held within the “Others” segment. These
assets are carried at amortised cost using the effective interest method. •
The Group also holds other non-derivative financial assets for the purpose of investment or satisfying regulatory liquidity requirements.
Such assets are held for an indefinite period and may be sold in response to needs for liquidity or changes in interest rates, credit
spreads, exchange rates or equity prices. Financial assets in this category are held in all business segments as well as the liquidity
management unit in the “Others” segment. These assets are classified as
available-for-sale and initially and subsequently
measured at fair value. Unrealised gains or losses arising from changes in fair value are
recognised in other comprehensive income and accumulated in available-for-sale revaluation reserves. When sold or impaired,
the accumulated fair value adjustments in the available-for-sale revaluation reserves are reclassified to the income statement.
Unquoted equity investments classified as available-for-sale for which fair values cannot be reliably determined are carried at cost,
less impairment if any.
Where the classification and measurement of financial assets do not reflect the management of the financial assets or financial liabilities,
the Group may apply hedge accounting where permissible and relevant to better reflect the management of the financial assets. Please refer to
Note 2.19 for details on hedging and hedge accounting.
Please refer to Note 14 for further details on the types of financial assets classified and measured as above.
Reclassification
When the purpose for holding a financial asset changes, or when FRS otherwise requires it, non-derivative financial assets are reclassified
accordingly. Financial assets may be classified out of the fair value through profit or loss or available-for-sale categories only in particular
circumstances as prescribed by FRS 39. In 2008 and 2009, the Group reclassified certain financial assets between categories as a result
of a change in its holding intention. The reclassifications did not have a material impact on the income statement and statement of
comprehensive income for the current year.
Determination of fair value
The fair value of financial assets is the price that would be received if the asset is sold in an orderly transaction between market
participants at the measurement date. Fair value is generally estimated by discounting the future contractual cash flows at the
current market interest rate that is available to the Group for similar financial instruments. Where applicable, a valuation reserve or pricing
adjustment is applied to arrive at the fair value. The determination of fair value is considered a significant accounting policy for the Group
and further details are disclosed in Note 40.
Offsetting
Financial assets and liabilities are presented net when there is a legally enforceable right to offset the recognised amounts and there is an
intention to settle them on a net basis, or realise the asset and settle the liability simultaneously.
Derecognition
Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or when they have been transferred
together with substantially all the risks and rewards of ownership.
The Group enters into certain transactions where it transfers financial assets recognised on its balance sheet but retains either all or a portion
of the risks and rewards of the transferred financial assets. In such cases, the transferred financial assets are not derecognised from the
balance sheet. Such transactions include repurchase transactions described in Note 2.12. They also include transactions where control
over the financial asset is retained, for example, by a simultaneous transaction such as options with the same counterparty to which
the asset is transferred. These are mainly transacted in the “Treasury” segment. In such cases, the Group continues to recognise the asset to
the extent of its continuing involvement which is the extent to which it is exposed to changes in the value of the transferred asset.
Please refer to Note 19 for disclosures on transferred financial assets.