Financial liabilities dbs annual report 2014

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฀are฀classiied฀as฀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”. Financial liabilities in this classification are usually within the “Treasury” segment. In addition, some financial liabilities used to fund specific financial assets measured at fair value through profit or loss are designated under the fair value option when doing so eliminates or significantly reduces measurement or recognition inconsistencies that would otherwise arise. 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 are also presented together with other fair value changes in “Net trading income”. •฀ ฀Derivative฀liabilities฀are฀treated฀consistently฀with฀derivative฀ assets. Please refer to Note 2.8 for the accounting policy on derivatives. •฀ ฀Other฀inancial฀liabilities฀are฀carried฀at฀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 40 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