Page 216 - Bank Muamalat_AR24

214 BANK MUAMALAT MALAYSIA BERHAD

NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2024 (29 JAMADIL AKHIR 1446H)

2. MATERIAL ACCOUNTING POLICIES (CONT’D.)

(b) Financial assets (cont’d.)
(i) Initial recognition and subsequent measurement (cont’d.)

(2) Financial assets at fair value through other comprehensive income (“FVOCI”)
The Group and the measure financial assets at FVOCI when both of the following conditions are met:

• The contractual terms of the financial assets meet the SPPP test; and
• The instrument is held within a business model, the objective of which is achieved by both collecting
contractual cash flows and selling financial assets.
Financial assets at FVOCI are subsequently measured at fair value with gains and losses arising due to
changes in fair value recognised in the Other Comprehensive Income (“OCI”). Profit income and foreign
exchange gains and losses are recognised in profit or loss in the same manner as for financial assets
measured at amortised cost. Where the Group and the Bank hold more than one investment in the same
security, they are deemed to be disposed off on a first-in-first-out basis. Upon derecognition, cumulative
gains or losses previously recognised in OCI are reclassified from OCI to profit or loss.

Equity instruments are normally measured at FVTPL. However, for nontraded equity instruments, with
an irrevocable option at inception, the Group and the Bank measure the changes through FVOCI
(without recycling profit or loss upon derecognition).
Included in financial assets at FVOCI are certain equity and debt instruments.
(3) Financial assets at fair value through profit or loss (“FVTPL”)

Financial assets at FVTPL are those that are held-for-trading and have been either designated by the
Group and the Bank upon initial recognition or are mandatorily required to be measured at fair value under
MFRS 9 Financial Instruments.
The Group and the Bank designate an instrument at FVTPL upon initial recognition when one of the
following criteria is met. Such designation is determined on an instrument-by-instrument basis:

• The designation eliminates or significantly reduces the inconsistent treatment that would otherwise arise
from measuring the assets or liabilities or recognising gains or losses on them on a different basis; or
• The assets and liabilities are part of a group of financial assets, financial liabilities or both, which are
managed and their performance evaluated on a fair value basis, in accordance with a documented risk
management or investment strategy.
Included in financial assets at FVTPL are financial investments at FVTPL, financial assets designated upon
initial recognition, financing of customers and Islamic derivatives financial investments.
Subsequent to initial recognition, financial assets held-for-trading and financial assets designated at
FVTPL are recorded in the statement of financial position at fair value. Changes in fair value are recognised
in profit or loss under the caption of ‘other operating income’.
(ii) Reclassifications

Reclassifications of financial assets are made when, and only when, the business model for those assets changes.
Such changes are expected to be infrequent and arise as a result of significant external or internal changes such
as the termination of a line of business or management buy-over.