Investor Presentaiton
NOTES TO THE GROUP CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
7
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(j) Financial Assets and Financial Liabilities (continued)
(vii) Investment Securities (continued)
For debt securities measured at FVOCI, gains and losses are recognised in OCI, except for the
following, which are recognised in profit or loss in the same manner as for financial assets measured
at amortised cost.
.
Interest revenue using the effective interest method;
ECL and reversals; and
Foreign exchange gains and losses.
When a debt security measured at FVOCI is derecognised, the cumulative gain or loss previously
recognised in OCI is reclassified from equity to profit or loss.
The Group elects to present in OCI changes in the fair value of certain investments in equity
instruments that are not held for trading. The election is made on an instrument-by-instrument
basis on initial recognition and is irrevocable.
Gains and losses on such equity instruments are never reclassified to profit or loss and no
impairment is recognised in profit or loss. Dividends are recognised in profit or loss unless they
clearly represent a recovery of part of the cost of the investment, in which case they are recognised
in OCI. Cumulative gains and losses on equity instruments recognised in OCI are transferred to
retained earnings on disposal of an investment.
(viii) Derecognition
The Group derecognises a financial asset when the contractual rights to the cash flows from the
financial asset expires, or it transfers the rights to receive the contractual cash flows in a transaction
in which substantially all of the risks and rewards of the ownership of the financial asset are
transferred or in which the Group neither transfers nor retains substantially all of the risks and
rewards or ownership and it does not retain control of the financial asset.
On derecognition of a financial asset, the difference between the carrying amount of the asset
(or the carrying amount allocated to the portion of the asset derecognised) and the sum of (i) the
consideration received (including any new asset obtained less any new liability assumed) and (ii) any
cumulative gain or loss that had been recognised in OCI is recognised in profit or loss.
Any cumulative gain/loss recognised in OCI in respect of equity investment securities designated as
FVOCI is not recognised in profit or loss account on derecognition of such securities.
Any interest in transferred financial assets that qualify for derecognition that is created or retained
by the Group is recognised as a separate asset or liability.
The Group enters into transactions whereby it transfers assets recognised on its consolidated
statement of financial position but retains either all or substantially all of the risks and rewards of the
transferred assets or a portion of them. In such cases, the transferred assets are not derecognised.
Examples of such transactions are securities lending and sale-and-repurchase transactions.
NOTES TO THE GROUP CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
7
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(j) Financial Assets and Financial Liabilities (continued)
(vii) Derecognition (continued)
In transactions in which the Group neither retains nor transfers substantially all of the risks
and rewards of ownership of a financial asset and it retains control over the asset, the Group
continues to recognise the asset to the extent of its continuing involvement, determined by
the extent to which it is exposed to changes in the value of the transferred asset.
The Group derecognises a financial liability when its contractual obligations are discharged or
cancelled or expired.
(ix) Modification of Financial Assets and Financial Liabilities
If the terms of a financial asset are modified, the Group evaluates whether the cash flows of the
modified asset are substantially different. If the cash flows are substantially different, then the
contractual rights to cash flows from the original financial asset are deemed to have expired. In this
case, the original financial asset is derecognised and a new financial asset is recognised at fair value.
If the cash flows of the modified asset carried at amortised cost are not substantially different,
then the modification does not result in derecognition of the financial asset. In this case, the Group
recalculates the gross carrying amount of the financial asset and recognises the amount arising
from adjusting the gross carrying amount as modification gain or loss in profit or loss. If such a
modification is carried out because of financial difficulties of the borrower, then the gain or loss is
presented together with impairment losses. In other cases, it is presented as interest income.
The Group derecognises a financial liability when its terms are modified and the cash flows of the
modified liability are substantially different. In this case, a new financial liability based on the modified
terms is recognised at fair value. The difference between the carrying amount of the financial liability
extinguished and the new financial liability with modified terms is recognised in profit or loss.
(x) Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the Group
consolidated statement of financial position when, and only when, the Group currently has legally
enforceable rights to set off amounts and it intends either to settle them on a net basis or through
realise the asset and settle the liability simultaneously.
Income and expenses are presented on a net basis only when permitted under IFRS, or for gains
and losses arising from a group of similar transactions such as in the Group's trading activities.
(xi) Fair Value Measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction in the principal market at the measurement date. The fair value measurement is based on
the presumption that the transaction to sell the asset or transfer the liability takes place either:
37
EMIRATES NBD BANK PJSC - GROUP CONSOLIDATED FINANCIAL STATEMENTS - FOR THE YEAR ENDED 31 DECEMBER 2021
38
.
In the principal market for the asset or liability; or
.
In the absence of principal market, in the most advantageous market for the asset and liabilities.
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