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2.9 Cash and cash equivalents
For the purposes of the cash flow statement, cash and cash equivalents comprise cash on hand and non-
restricted balances with central banks which are readily convertible into cash.
2.10 Impairment of financial assets The Group assesses at each balance sheet date
whether there is evidence that a financial asset or a group of financial assets is impaired.
a Financial assets classified as loans and
receivables and held to maturity
The Group carries out regular and systematic reviews of all credit facilities extended to customers.
The criteria that the Group uses to determine whether there is evidence of an impairment loss include:
Significant financial difficulty of the issuer or
obligor, including breach of covenants andor financial conditions.
A breach of contract, such as a default or
delinquency in interest or principal payments.
Granting of a concession to the borrower, for economic or legal reasons relating to the
borrower’s financial difficulty, that the Group would not otherwise consider.
High probability of bankruptcy or other financial
reorganisation of the borrower. Specific allowances for credit losses
A specific allowance for credit losses is recognised if there is evidence that the Group will be unable to
collect all amounts due under a claim according to the original contractual terms or the equivalent value. A
“claim” means a loan, debt security or a commitment such as financial guarantees and letters of credit.
A specific allowance for credit losses is recorded as a reduction in the carrying value of a claim on the
balance sheet. For an off-balance sheet item such as a commitment, a specific allowance for credit loss is
recorded as “provision for loss in respect of off-balance sheet credit exposures” within “Other liabilities”.
Specific allowances for credit losses are evaluated either individually or collectively for a portfolio.
Specific allowance for an individual credit exposure is made when existing facts, conditions or valuations
indicate that the Group is not likely to collect the principal and interest due contractually on the claim. An
allowance is reversed only when there has been an identifiable event that has led to an improvement in the
collectability of the claim. The amount of specific allowance also takes into account the collateral value,
which may be discounted to reflect the impact of a forced sale or untimely liquidation.
Overdue unsecured consumer loans which are homogenous in nature, such as credit card receivables,
are pooled according to their delinquency behaviour and evaluated for impairment collectively as a group,
taking into account the historical loss experience of such loans.
When a loan is uncollectible, it is written off against the related allowance for loan impairment. Such loans are
written off after all the recovery procedures have been exhausted and the amount of the loss has been
determined. Recoveries in full or in part of amounts previously written off are credited to the income
statement in “Allowances for credit and other losses”. General allowances for credit losses
Apart from specific allowances, the Group also recognises general allowances for credit losses. The
Group maintains a level of allowances that is deemed sufficient to absorb the estimated credit losses inherent
in its loan portfolio including off-balance sheet credit exposures. The Group maintains general allowances
of at least 1 of credit exposures arising from both on and off-balance sheet items against which specific
allowances have not been made, adjusted for collateral held. This is in accordance with the
transitional arrangements under MAS Notice 612. b Financial assets classified as available-for-sale
The Group assesses at each balance sheet date whether there is evidence that an available-for-sale
financial asset is impaired. In the case of an equity investment, a significant or
prolonged decline in the fair value of the security below its cost is a factor in determining whether the asset is
impaired. When there is evidence of an impairment of an
available-for-sale financial asset, the cumulative loss
– measured as the difference between the acquisition
cost and the current fair value, less any impairment loss on that financial asset previously recognised in the
income statement – is reclassified from the revaluation
reserve within equity to the income statement. For equity investments, impairment losses are not
reversed until they are disposed of. For impaired debt instruments that subsequently recover in value, the
impairment losses are reversed through the income statement if there has been an identifiable event that
led to the recovery. 2.11 Repurchase agreements
Repurchase agreements Repos are treated as collateralised borrowings. The amount borrowed is
reflected as a financial liability either as “Due to banks” or “Deposits and balances from customers”. The
securities sold under repos are treated as pledged
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assets and remain on the balance sheet at amortised cost or fair value depending on their classification.
Reverse repurchase agreements Reverse repos are treated as collateralised lending. The amount lent is
reflected as a financial asset as “Cash and balances with central banks”, “Due from banks” or “Loans and
advances to customers”. Amounts paid and received in excess of the amounts
borrowed and lent on the repos and reverse repos are amortised as interest expense and interest income
respectively using the effective interest method. 2.12 Goodwill
Goodwill arising from business combinations generally represents the excess of the acquisition cost over the
fair value of identifiable assets acquired and liabilities and contingent liabilities assumed on the acquisition
date. Goodwill is stated at cost less impairment losses and is tested at least annually for impairment.
At the acquisition date, any goodwill acquired is allocated to each of the cash-generating units CGU or
group of CGUs expected to benefit from the
combination’s synergies. An impairment loss is recognised when the carrying
amount of a CGU, or group of CGUs, including the goodwill, exceeds the applicable recoverable amount.
The recoverable amount of a CGU or CGU group is the
higher of the CGU’s or CGU group’s fair value less cost to sell and its value-in-use. An impairment loss on
goodwill is recognised in the income statement and cannot be reversed in subsequent periods.
2.13 Properties and other fixed assets Properties including investment properties and other