Investor Presentaiton

MORGAN STANLEY BANK ASIA LIMITED NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2020 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. Functional currency Items included in the financial statements are measured and presented in US dollars, the currency of the primary economic environment in which the Company operates. All currency amounts in the financial statements are rounded to the nearest thousand US dollars. b. Foreign currencies All monetary assets and liabilities denominated in currencies other than US dollars are translated into US dollars at the rates ruling at the reporting date. Transactions and non-monetary assets and liabilities denominated in currencies other than US dollars are recorded at the rates prevailing at the dates of the transactions. Foreign exchange differences arising from remeasurement of the amortised cost of fair value through other comprehensive income ("FVOCI") assets are recognised in the income statement. All other gains and losses from movements in foreign exchange rates on FVOCI assets are recorded in other comprehensive income. All other translation differences are taken through the income statement. Exchange differences recognised in the income statement are presented in ‘Other revenue' or 'Other expense', except where noted in 3(c) below. C. i) Financial instruments Financial instruments mandatorily at fair value through profit and loss Trading financial instruments Trading financial instruments include all derivatives contracts. Trading financial instruments are initially recorded on trade date at fair value (see note 3(d) below). All subsequent changes in fair value and foreign exchange differences are reflected in the income statement in 'Net trading income/(expense)'. Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a financial instrument. For all trading financial instruments, transaction costs are excluded from the initial fair value measurement of the financial instrument. These costs are recognised in the income statement in 'Other expense'. Non-trading financial assets at fair value through profit or loss Non-trading financial assets at fair value through profit or loss ("FVPL") include secured financing transactions such as securities purchased under agreements to resell. Non-trading financial assets at FVPL are principally financial assets where the Company makes decisions based upon the assets' fair values and are generally recognised on settlement date at fair value (see note 3(d) below), since they are neither regular way nor are they derivatives. From the date the terms are agreed (trade date), until the financial asset is funded (settlement date), the Company recognises any unrealised fair value changes in the financial asset as non-trading financial assets at FVPL. On settlement date, the fair value of consideration given is recognised as a non-trading financial asset at FVPL. Realised interest is included within ‘Interest income' or 'Interest expense'. For all non-trading financial assets at FVPL, transaction costs are excluded from the initial fair value measurement of the financial assets. These costs are recognised in the income statement in ‘Other expense' (note 8). 14

View entire presentation