Page 104 - EXIM-BANK-AR20

102 EXIM BANK MALAYSIA
Annual Report 2020

NOTES TO THE FINANCIAL STATEMENTS

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D.)
2.3 Standards issued but not yet effective (cont’d.)

Effective for financial periods beginning on or after 1 January 2021 (cont’d.)
Interest Rate Benchmark Reform - Phase 2 (Amendments to MFRS 9, MFRS 139, MFRS 7, MFRS 4 and MFRS 16)
Amendments were made on some specific requirements of those standards with respect to issues affecting financial
reporting during the reform of an interest rate benchmark. The amendments provide a practical expedient whereby the
Group and the Bank would not derecognise or adjust the carrying amount of financial instruments for modifications
required by interest rate benchmark reform, but would instead update the effective interest rate to reflect the change in
the interest rate benchmark. On hedging relationship, entities would be required to amend the formal designation of a
hedging relationship to reflect the modifications and/or changes made to the hedged item and/or hedging instruments
as a result of the reform. However, the modification does not constitute discontinuation of the hedging relationship nor
the designation of a new hedging relationship.
Effective for financial periods beginning on or after 1 January 2022

• MFRS 101 Annual improvements to MFRS Standards 2018-2020
• MFRS 3 Reference to the Conceptual Framework (amendments to MFRS 3 Business Combinations)
• MFRS 9 Annual Improvements to MFRS Standards 2018-2020
• MFRS 101 Classification of liabilities as current or non-current (amendments to MFRS 101)
• MFSR 116 Amendment on Property, plant and equipment - proceeds before intended use

Effective for financial periods beginning on or after 1 January 2023
• MFRS 17 Insurance Contracts
The Group and the Bank expect that the adoption of the above standards and interpretations will have no material impact
on the financial statements in the period of initial application except for MFRS 17 Insurance Contracts.
MFRS 17 Insurance Contracts

In August 2017, MFRS 17 was issued, a comprehensive new accounting standard for insurance contracts covering
recognition and measurement, presentation and disclosure, which replaces MFRS 4.

The Group and the Bank plan to adopt the new standard on the required effective date and the Board is likely to oversee
the implementation of MFRS 17. The Group and the Bank expect that the new standard will result in an important
change to the accounting policies for insurance contract and takaful liabilities of the Group and the Bank and it is likely
to have a significant impact on profit and total equity together with the Group’s and the Bank’s financial statements’
presentation and disclosures.
Under MFRS 17, the general model requires entities to recognise and measure a group of insurance contracts at: (i) a
risk-adjusted present value of future cash flows that incorporates information that is consistent with observable market
information; plus (ii) an amount representing the unearned profit in the group of contracts.