Page 221 - Bank Muamalat_AR24

ANNUAL REPORT 2024 1 2 3 4 5 6 7 Our Numbers 8 219

2. MATERIAL ACCOUNTING POLICIES (CONT’D.)

(c) Financial liabilities
(i) Date of recognition

All financial liabilities are initially recognised on the trade date, i.e. the date that the Group and the Bank become
a party to the contractual provision of the instruments.
(ii) Initial recognition and subsequent measurement

Financial liabilities are classified according to the substance of the contractual arrangements entered into and
the definitions of a financial liability.

Financial liabilities are classified as either financial liabilities at FVTPL or at amortised cost.
(1) 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 held-for-trading include derivatives entered into by the Group and the Bank that do
not meet the hedge accounting criteria. Derivative liabilities are initially and subsequently measured at
fair value, with any resultant gains or losses recognised in statements of profit or loss. Net gains or losses
on derivatives include exchange differences.
(2) Financial liabilities at amortised cost
The Group’s and the Bank’s financial liabilities at amortised cost include deposits from customers, deposits
and placements of banks and other financial institutions, debt securities, bills and acceptances payable,
recourse obligation on financing sold to Cagamas and other liabilities.

(iii) Derecognition
A financial liability is derecognised when the obligation under the liability is redeemed or otherwise extinguished.
When an existing financial liability is replaced by another from the same financier on substantially different
terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated
as a derecognition of the original liability and the recognition of a new liability, and the difference in the
respective carrying amounts is recognised in the statements of profit or loss.
(d) Investment properties
Investment properties, comprising principally land and shop lots, are held for long-term rental yields or for capital
appreciation or both, and are not occupied by the Group and the Bank.
Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition,
investment properties are stated at fair value, representing open-market value determined annually by registered
independent valuer having appropriate recognised professional qualification. Fair value is based on active market
prices, adjusted, if necessary, for any difference in the nature, location or condition of the specific asset. If this information
is not available, the Group and the Bank use alternative valuation methods such as recent prices of less active markets
or discounted cash flow projections. Changes in fair values are recorded in statements of profit or loss in the year in
which they arise.

On disposal of an investment property, or when it is permanently withdrawn from use or no future economic benefits
are expected from its disposal, it shall be derecognised. The difference between the net disposal proceeds and the
carrying amount is recognised in statements of profit or loss in the period of the retirement or upon disposal.