180 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2022 Additional Information We Are Kenanga Message From Our Leaders Our Sustainability Approach How We Are Governed Financial Statements Shareholders’ Information 3. ACCOUNTING POLICIES (CONT’D.) 3.4 Summary of significant accounting policies (cont’d.) (s) Income recognition (cont’d.) (ii) Interest and similar income The Group and the Bank calculate interest income by applying the EIR to the gross carrying amount of financial assets other than credit-impaired assets. When a financial asset becomes credit-impaired (as set out in Note 3.4(k)(i)) and is, therefore, regarded as ‘Stage 3’, the Group and the Bank calculate interest income by applying the effective interest rate to the net amortised cost of the financial asset. For POCI financial assets (as set out in Note 3.4(k)(iv)), the Group and the Bank calculate interest income by calculating the credit-adjusted EIR and applying that rate to the amortised cost of the asset. The creditadjusted EIR is the interest rate that, at original recognition, discounts the estimated future cash flows (including credit losses) to the amortised cost of the POCI financial assets. Interest income on all trading assets and financial assets mandatorily required to be measured at FVTPL is recognised using the contractual interest rate in net trading income and net gains or losses on financial assets at FVTPL, respectively. (iii) Fee and other income Brokerage fees are recognised on contract date upon execution of trade on behalf of clients computed based on a pre-determined percentage of the contract value. Loan arrangement fees and commissions, management and participation fees, underwriting fees and placement fees are recognised as income when all conditions precedent are fulfilled. Custodian fees, guarantee fees and fund management fees are recognised as income based on time apportionment basis. Corporate advisory fees are recognised as income on the completion of each stage of the assignment. Rollover fee is recognised upon the rollover of specific contracts under share margin financing. Gain or loss on disposal of investments is recognised upon the transfer of risks and rewards of ownership. (iv) Islamic banking income Income from Islamic banking scheme is recognised on an accrual basis in accordance with Shariah principles.
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