Cash and cash equivalents Impairment of financial assets The Group assesses at each balance sheet date

Year ended 31 December 2014 10

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 Year ended 31 December 2014 11 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