Page 121 - EXIM-Bank_Annual-Report-2022

A VISION COMMITMENT EMPOWERING ENSURING ENHANCING FINANCIAL
TO SERVE TO LEAD GROWTH SUSTAINABILITY GOVERNANCE STATEMENTS 119

Notes to the fiNaNcial statemeNts

2. sIGNIFICANt ACCouNtING PoLICIes (cont’d.)
2.4 Summary of significant accounting policies (cont’d.)

(f) Financial assets (cont’d.)
The most significant elements if interest within a debt arrangement are typically the consideration for the time value
of money and credit risk. To make the SPPI assessment, the Group and the Bank apply judgement and considers
relevant factors such as the currency in which the financial assets is denominated, and the period for which the
interest rate is set.

(i) Financial assets at amortised cost
Financial assets at amortised cost are subsequently measured using the Effective Interest Rate (“EIR”) or
the Effective Profit Rate (“EPR”) method and are subject to impairment. Gains and losses are recognised in
statement of profit or loss when the asset is derecognised, modified or impaired.

(ii) Financial assets at FVOCI
For debt instruments at FVOCI, interest income, foreign exchange revaluation and impairment losses or
reversals are recognised in the statement of profit or loss and computed in the same manner as for financial
assets measured at amortised cost. The remaining fair value changes are recognised in other comprehensive
income (“OCI”). Upon derecognition, the cumulative fair value change recognised in OCI is recycled to profit
or loss.

(iii) Financial assets designated at FVOCI
Upon initial recognition, the Group and the Bank can elect to classify irrevocably its equity investments as
equity instruments designated at FVOCI when they meet the definition of equity under MFRS 9.
Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognised as other
income in the statement of profit or loss when the right of payment has been established, except when the
Group and the Bank benefit from such proceeds as a recovery of part of the cost of the financial asset, in which
case, such gains are recorded in OCI. Equity instruments designated at FVOCI are not subject to impairment
assessment.

(iv) Financial assets at FVTPL
Financial assets at FVTPL include financial assets held for trading, financial assets designated upon initial
recognition at FVTPL, or financial assets mandatorily required to be measured at fair value. Financial assets are
classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term.

Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are
designated as effective hedging instruments. Financial assets with cash flows that are not solely payments of
principal and interest are classified and measured at FVTPL, irrespective of the business model. Notwithstanding
the criteria for debt instruments to be classified at amortised cost or at FVOCI, as described above, debt
instruments may be designated at FVTPL on initial recognition if doing so eliminates, or significantly reduces,
an accounting mismatch.

Financial assets at FVTPL are carried in the statements of financial position at fair value with net changes in fair
value recognised in the statement of profit or loss.