KENANGA ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 31 December 2018 163 ANNUAL REPORT 2018 5. TRANSITION DISCLOSURES (CONT’D.) The adoption of MFRS 9 has no impact on the classification and measurement of the Group’s and the Bank’s financial liabilities. Note: A. As of 1 January 2018, the Group has assessed its liquidity portfolio which had previously been classified as AFS debt instruments. The Group concluded that these instruments are managed within a business model of collecting contractual cash flows and selling the financial assets. Accordingly, the Bank has classified these investments as debt instruments measured at FVOCI. B. The Bank has elected the option to irrevocably designate some of its previous AFS equity instruments as equity instruments at FVOCI. C. As of 1 January 2018, the Bank did not have any debt instruments that did not meet the SPPI criterion within its held-to-maturity portfolio. Therefore, it elected to classify all of these instruments as debt instruments measured at amortised cost. D. The impact of adopting MFRS 9 on deferred tax is set out on table below and in Note 19. The impact of transition to MFRS 9 on reserves and retained profits is, as follows: Group Bank RM’000 RM’000 Fair value reserves Closing balance under MFRS 139 (31 December 2017) (6,629) (4,840) Reclassification adjustments in relation to adopting MFRS 9 1,264 1,264 Recognition of expected credit losses under MFRS 9 17 17 Deferred tax in relation to the above (Note 19) (307) (307) Opening balance under MFRS 9 (1 January 2018) (5,655) (3,866) Retained profits Closing balance under MFRS 139 (31 December 2017) 520,345 513,726 Recognition of expected credit losses under MFRS 9 (1,700) (2,040) Deferred tax in relation to the above (Note 19) 408 489 Opening balance under MFRS 9 (1 January 2018) 519,053 512,175 Total change in equity due to adopting MFRS 9 (318) (577)