Page 131 - EXIM-Bank_Annual-Report-2023

Management Discussion and Analysis Ensuring Sustainability Commitment to Lead Upholding Accountability Financial Statements 129

Notes to the fiNaNcial statemeNts

2. MATErIAL ACCouNTING PoLICy INForMATIoN (cont’d)
2.4 Summary of material accounting policy information (cont’d)

(h) Financial liabilities
Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as either at amortised cost or as financial liabilities at FVTPL.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables,
net of directly attributable transaction costs.

The Group’s and the Bank’s financial liabilities include trade and other payables, loans and borrowings including
bank overdrafts, and derivative financial instruments.
Subsequent measurement

The measurement of financial liabilities depends on their classification, as described below:
(i) Financial liabilities at FVTPL

Financial liabilities at FVTPL include financial liabilities held for trading and financial liabilities designated upon
initial recognition as at FVTPL.
Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the
near term. This category also includes derivative financial instruments entered into by the Group and the Bank
that are not designated as hedging instruments in hedge relationships as defined by MFRS 9.
Gains or losses on liabilities held for trading are recognised in the statement of profit or loss.

Financial liabilities designated upon initial recognition at FVTPL are designated at the initial date of recognition,
if, and only if the criteria in MFRS 9 are satisfied. The Group and the Bank have not designated any financial
liability as at FVTPL.
(ii) Loans and borrowings and trade and other payables
After initial recognition, interest-bearing loans and borrowings and payables are subsequently measured at
amortised cost using the Effective Interest Rate (“EIR”) or Effective Profit Rate (“EPR”) method. Gains and
losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR or EPR
amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs
that are an integral part of the EIR or EPR. The EIR or EPR amortisation is included as finance costs in the
statement of profit or loss.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms,
or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the
derecognition of the original liability and the recognition of a new liability.