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116 EXIM BANK MALAYSIA
Annual Report 2020

NOTES TO THE FINANCIAL STATEMENTS

2. SIGNIFICANT ACCOUNTING POLICIES (CONT’D.)
2.4 Summary of significant accounting policies (cont’d.)

(o) Revenue recognition (cont’d.)
(iii) Fee income earned from services that are provided over a certain period of time
Fees earned for the provision of services over a period of time are accrued over that period. These fees include
upfront, guarantee fees and facility fees.
(iv) Premium income

Premium income is recognised as income in the financial year in respect of risks assumed during that particular
financial year. The method of deferral of premium income is as stated in Note 2.4(m).
Premium income from reinsurance or retakaful is recognised based on periodic advices received from ceding
insurers.
Outward reinsurance premiums or retakaful contribution are recognised in the same financial year as the original
policies to which the reinsurance or retakaful relates.
(v) Islamic income recognition
Income from financing and receivables is recognised in the statement of profit and loss using the effective
profit method. The effective profit rate is the rate that discounts the estimated future cash payment and
receipts through the expected life of the financial asset or liability to the carrying amount of the financial asset
or liability. The calculation of the effective profit rate includes all contractual terms of the financial instrument
and includes any fees or incremental costs that are directly attributable to the instrument and are an integral
part of the effective profit rate.

Murabahah, Tawarruq and Istisna’
Murabahah/Tawarruq and Istisna’ income are accrued on monthly basis on the cost outstanding at the prevailing
effective profit rate over the duration of the financing.
Ijarah
Ijarah income is recognised on the effective profit rate of the cost of the leased asset over the leased period.

Bai’ Al Dayn
Bai’ Al Dayn income is recognised monthly on the effective discount rate on the purchase price of the invoice
over the duration of the financing.
Fee income earned from services that are provided over a certain period of time

Fees earned for the provision of services over a period of time are accrued over that period. These fees include
upfront, facility and Kafalah contract fees.

Takaful income
The source of Takaful income is derived from Takaful contributions. Income is recognised based on specific
percentage of the contribution amount from participants. The remaining amount is placed in Risk Fund which is
pooled for underwriting purposes.
Takaful income from retakaful is recognised based on periodic advices received from ceding takaful operators.