267 How We Are Governed Financial Statements Shareholders’ Information Additional Information 48. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES (CONT’D.) The methods and assumptions used in estimating the fair values of financial instruments are as follows: (i) Financial assets/liabilities for which fair value approximates carrying value The carrying amounts of financial assets and financial liabilities that have a short-term maturity and deposits/accounts without a specific maturity, approximate fair values. (ii) Financial assets at FVTPL, FVOCI and AC The fair values are estimated based on quoted or observable market prices at the reporting date. Where such quoted or observable market prices are not available, the fair values are estimated using pricing models or discounted cash flow techniques. Where discounted cash flow technique is used, the expected future cash flows are discounted using prevailing market rates for a similar instrument at the reporting date. (iii) Derivatives Fair values are estimated based on quoted or observable market prices at the reporting date. Options are using Black-Scholes model and Swaps are using discounted cash flow. These valuation techniques incorporates various market and observable assumptions including market rate volatility. (iv) Loans, advances and financing The fair values of fixed rate loans with remaining maturity of less than one year and variable rate loans are estimated to approximate their carrying values. For fixed rate loans with remaining maturity of more than one year, the fair values are estimated based on expected future cash flows of contractual instalment payments and discounted at applicable prevailing rates at the reporting date offered to new borrowers with similar credit profiles. (v) Deposits from customers The fair values of deposit liabilities payable on demand (demand and savings deposits), or deposits with maturity of less than one year are estimated to approximate their carrying amounts. The fair values of fixed deposits with remaining maturities of more than one year are estimated based on expected future cash flows discounted at applicable prevailing rates offered for deposits of similar remaining maturities. The fair values of Islamic deposits are deemed to approximate their carrying amounts as profit rates are determined at the end of their holding periods based on the profit generated from the assets invested. (vi) Deposits and placements of banks and other financial institutions The carrying values of these financial instruments with remaining maturity of less than one year approximate their carrying amounts due to the relatively short maturity of the financial instruments. For deposits and placements with maturities of one year and above, the estimated fair value is based on discounted cash flows using prevailing money market interest rates at which similar deposits and placements would be made with financial institutions of similar credit risk and remaining period to maturity. (vii) Borrowings The fair values of borrowings are estimated based on expected future cash flows discounted at applicable variable rates offered for borrowings.
RkJQdWJsaXNoZXIy NDgzMzc=